In Re: )
)
FCC BANDWIDTH FORUM )
Volume: 1
Pages: 1 through 208
Place: Washington, D.C.
Date: January 23, 1997
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In Re: )
)
FCC BANDWIDTH FORUM )
Room 856
FCC Building
1919 M Street, N.W.
Washington, D.C.
Thursday,
January 23, 1997
The parties met, pursuant to Notice, at
approximately 9:00 a.m.
BEFORE: REED HUNDT
Chairman, FCC
APPEARANCES:
On behalf of the FCC:
MR. REED HUNDT, Chairman, FCC
COMMISSIONER NESS
MR. ELLIOT MAXWELL, FCC
MR. STAGG NEWMAN, Bellcore
MR. ROBERT PEPPER, FCC
MR. KEVIN WERBACH, FCC
APPEARANCES (Continued):
Additional Appearances:
PANEL I:
MR. JOHN CURRAN, BBN
MR. DOUGLAS MORGAN, Winstar
MR. DAVID REED, Cable Labs
MR. LES VADASZ, Intel
MR. PAT WHITE, Bell Atlantic
PANEL II:
MR. LEE BAUMAN, Pacific Telesis
MR. KEITH FOX, Cisco
MR. MATTHEW KORN, America Online
MR. JAMES LOVE, Consumer Project on Technology
MR. MIKE TREST, ATM Net
PANEL III:
MS. GLEE HARRAH CADY, NetCom
MR. PETER HARTER, Netscape
MR. DANIEL WEITZNER, Center for Democracy and
Technology
APPEARANCES (Continued):
Additional Speakers:
MR. DAN BERNENGER, Vocal Tech
MR. ALAN CIAMPORCERO
MR. ROY DAHNKE, SETA Corporation
MR. KEN DEUTSCH, Issue Dynamics
MR. RUSSELL DOYAN, Saylor
MR. IHOR GOWDA, Newbridge Networks
MR. GORDON JACOBSON, IRAP Network
MR. DAVID LaPIER, Cisco
MR. JOHN MAZER, General Datacom
MR. BROCK MEEKS, MSNBC
MR. STEVE NEVAS, Cyberbridge Associates
MR. CHARLES ROSS, President, Canthos Corporation,
BNET
MR. BOB SCHMIDT, National Digital Network
MR. ANDREW SHAPIRO, Twentieth Century Fund
STEVE STEWART, IBM
MR. JEFF WALDHUTER, Executive Director, Nynex
Science and Technology
MS. GWENDOLYN WOODARD, President, Worldwide
Education Consultants
I N D E X
VOIR
WITNESSES: DIRECT CROSS REDIRECT RECROSS DIRE
None.
E X H I B I T S
IDENTIFIED RECEIVED REJECTED
None.
Hearing Began: 9:00 a.m. Hearing Ended: 3:40 p.m.
Recess Began: 1:15 p.m. Recess Ended: 2:19 p.m.
P R O C E E D I N G S
MR. PEPPER: Good morning and welcome to the --
okay. Now I can say good morning. We are, by the way,
putting this broad band forum online with both video as well
as audio on the Net. There will be demonstrations of this
beginning at noon down in room 845 that you can see. I'd
just like to welcome everybody to the FCC's broad band forum
and very quickly turn it over to our Chairman, Reed Hundt.
COMMISSIONER HUNDT: Thank you all very, very
much. I'm very pleased to see you and I'm especially
impressed by the very distinguished panelists that we're
going to have over the course of the day. You never know
when you say that something is a first, you never know if
that isn't a tremendous criticism of the fact that you
didn't do whatever it was a lot earlier. Or if instead it's
just a self-complement about the fact that you've had some
kind of epiphany and you finally recognized that that thing
that is a first is very important.
I don't know whether this is an epiphanic moment
or an appropriate moment for self-doubt and criticism for
the FCC. Maybe it's a little bit of both. We have never
had a forum like this. It's David Reed's fault really. He
told us to have it a couple of years ago, but he wasn't
persuasive enough when I first got here. I'm just kidding,
David. It's great to see you.
We've never had a forum just like this, but we
have for the last couple of years been increasingly
concerned at the FCC about what we call the problem of
access and band width. We're not 100 percent sure exactly
how to state the problem. We're not exactly sure what are
the dimensions of the issues here. We have some grasp that
public policy is becoming increasingly important to the
emerging industry of band width delivery if I can call it
that.
But part of the purpose of this forum is to define what
are the interactions between conventional telcom public
policy and the band width issues that increasingly are
preoccupying so many of the industries of the world, but
particularly now as never before are an important part of
the function of our traditional telcom industry.
So I think what you're helping us do today is
define the questions. Now, because we're dealing with
communications, actually you can already look the answers up
in George Gilder's article, for example. In many ways,
we're just trying to take George's answers and those of you
who like me have enjoyed reading George's answers for many
years, you will understand that the problem with George's
answers is just making sure that you do have the question
matched up correctly with those answers.
George has pointed out, for example, that we
should not have the options of the spectrum because the
spectrum as a band width possibility is now infinite and
that spread spectrum technology means that we have no band
width issue with respect to spectrum. $24 billion has been
paid by people who don't seem to agree with George and who
desire to have exclusive licenses. Possibly today you all
will tell us that those people are all wrong.
If you do say that, try to be just a little low
key about it would you please? Because we have a number of
other options coming up and Congress in fact believes that
the balanced budget depends on George being wrong, at least
in the next couple of years.
I've also read Economist's answers to the
questions that I hope you all will frame today. The
Economist announced that time and distance have no meaning
in telecommunications. This came as a very welcome relief
to those of us working on interstate access reform and we
suggested last night to a number of people in the industry
that meant time and distance have no meaning and intrastate
and interstate therefore is a concept that is of no
relevance.
This is a little bit of a problem to the world as
we know it. $23 billion in charges to the telcom industry
based on the definition of state lines, something that's
actually part of our constitution. The Economist being
published in Never-Neverland was kind of indifferent to the
taxation system that in fact is built on the notion that
time and distance have if not meaning a presumption of
meaning.
What are we supposed to do in short about the real
world in which it may be true that in many technological
ways time and distance have less significance than they ever
had before in terms of communication, but it is not at all
the case that they have no meaning in terms of the reform of
the systems that currently exist so as in fact to provide a
climate in which we can create the maximum incentives for
the proliferation of band width and for the proliferation of
access.
I also read I guess it was last July that Bill
Gates and Andy Grove had a fascinating dialogue in which
Andy -- and Les is here to explain this today I hope. Andy
said, if I remember correctly, the following. And I'm
remembering this by reading the quote.
"As exciting as the Internet is though, there's
one big problem. Telecommunications bad width. And Gates
responded, band width bottlenecks. No question. That's the
biggest obstacle to where we'd like to take the PC."
We actually found this particular colloquy to be
immensely interesting and we are curious to know whether it
is a synonym for a colloquy that we are having here in
public in a variety of proceedings. In our colloquy, we
talk about the exclusive facility bottleneck problem in
communications.
We talk about whether or not the last mile of the
local loop, the spread of wire from the consumer to some
centralized aggregation point. We talk about whether or not
that is a bottleneck. We talk about that in antitrust
terms. We talk about it in competition terms. We also talk
about whether the current local exchange market is a
bottleneck. That is the key issue in access reform.
When we're having that conversation, what we'd
like to find out today is are we also having a conversation
on the same topic that Andy and Bill were talking about. Do
they mean the same thing that we mean? If we don't mean the
same thing, let's find out the difference.
But if we do mean the same thing, then it should
be the case that this obstacle to where we'd like to take
the PC in fact is the topic that we are spending hundreds,
indeed thousands of hours on right here at the FCC. And so
now we've discovered that maybe our traditional public
policy pursuits are directly related to the future of our
information economy in an even bigger way than we may
previously have thought was the case.
The FCC for many years has had a group called the
Network Reliability Council. It's primarily been run by the
incumbent telephone companies. Although it's been open to
participation from all the other industries that have ever
wanted to be involved and many have wanted to be involved.
The Network Reliability Council concerns itself
with, among other things, failure rates for our
communications system. The Network Reliability Council is
the principle way in which the telcom industry creates the
protocols that allow it to use redundancy in the network so
as to make communications continue to work in the event of,
and this has all happened while Rochelle and Susan and I
have been here, earthquakes in California, hurricanes in
South Carolina, numerous other calamities.
We don't like to spend a lot of time dwelling on
this, but the fact is there are dozens and dozens and dozens
of incidents of this kind every year of various levels of
magnitude. And when we say that we have the greatest
communication system in the world, what we mean in this
country, among other things is that our system does not fail
in the event of these crises.
Now, one thing that we're very curious about is
why does my 11 year old get a busy signal when he tries to
get on America-On-Line? And is that part of what ought to
be the mission of the Network Reliability Council? Or in
fact, should it be the case where we say, no, it isn't
important that the Internet be reliable in the same way as
the circuit switch network?
Is that really what you all want to tell us, that
isn't important? Remember that the Network Reliability
Council is not guided by regulations. It is an
intra-industry group that we bless and participate with.
But fundamentally, it is a means for cooperation that allows
everyone to take advantage of the redundancy that is built
into the circuit's network.
So one of the things we'd like to find out is
whether or not reliability, certainty, the ability to
utilize redundancy is in fact an appropriate policy issue
with respect to the packet switch network? Or would you say
to us, no, that's not of any particular importance and if I
happen to rely on packet switch technology to get my sports
or news or make stockmarket trades? Well, that's not
terribly important if that doesn't work for several hours or
days. Hmm.
Don't misunderstand us. We do not in any way
intend in this forum to be empowering government to do that
which it does not need to do. Please understand the
opposite to be the case because the opposite is true.
What we would like is to have help from all the
relevant industries, users, consumer groups, participants in
our information economy. We'd like their help in figuring
out the traditional telecommunications policy problems to
the degree that they have any bearing on what I read in all
of these articles is the fundamental issue of building the
information highway by providing more bandwidth, cheaper
access and greater availability.
So I'm terribly, terribly excited about this forum
because I think that it will in fact lead to that kind of
help and it will permit us to get to what we're ultimately
looking forward to and that is a profoundly deregulatory era
in the communications system. Right now in this country,
there are 10,000 people employed in regulating the
telecommunications industry. There's about 200 here and
9,800 in the states. There are approximately 25,000 pages
of orders and decisions that regulate the communications
industry. There's about four dozen pages here and all the
rest are issued at the state level. None of us, not our
friends at the state level and none of us here at the FCC,
desire to have this level of micromanagement be a necessity
or even be desirable as the communications era unfolds. But
none of us should fool ourselves. All of that requires a
lot of change to do away with or to alter or to modify. So
when I say we need help in effecting this change, I know
you'll have to believe me and it's your help that we're
counting on getting today. Thank you all very much.
[applause]
MR. PEPPER: I believe Commissioner Ness has a few
words.
COMMISSIONER NESS: Thank you, very much. That
was a terrific introduction to the problems that we are
looking at globally as well as domestically. And I'm
delighted to have the opportunity to join everyone here
today to explore some of these issues.
We've reached a new stage in the long standing
debate between the telephone companies and the Internet
community. For too long, the argument has been one of
whether enhanced service providers should pay access
charges. The telcos say that the ESP exemption should be
ended. The ESPs say they aren't carriers and shouldn't be
required to pay carrier charges that aren't assessed on
other users of the telephone network.
A recent MPRN on access charges and the forum
today represent a new stage in that debate. The discussion
shouldn't only be about money, however, but it should really
be focused on technology. The needs and expectations of
computer users are different from those of consumers using
the telephone network only for voice calls.
We need to understand better how networks might
more efficiently carry voice and data traffic, how new or
different equipment and technologies could enable telephone
companies and other service providers to better serve
computer communications. And what costs are associated with
existing and new ways of transmitting computer traffic. Our
inquiries should go beyond the traditional wired voice
network and consider non-traditional providers such as
licensed and unlicensed wireless operators and equipment.
We must also explore how increased competition in
the provision of transmission services can alleviate the
concerns we've heard, both from the telephone companies as
well as from the computer industry. The more that we can
rely on market forces to determine both the technologies
that will be employed and the means by which costs will be
recovered, the better will be served Congress's goals of
competition and deregulation as the Chairman so beautifully
stated.
I want to congratulate the staff who put together
a stellar program and as a computer user myself with a
dedicated ISTN business line at home, two children fighting
for time on our family's information service provider and my
husband being online with his office interfering with my
trying to send faxes, I'll be personally interested in
seeing how the solutions are formulated today.
Moreover, I look forward some day soon to
following the proceedings in my office on my computer as
many people will be doing today thanks to the FCC's online
capabilities. So thank you very much and I hope it's a
productive day for us all. Thank you. [applause]
MR. PEPPER: I'd also like to recognize
Commissioner Chong who's here. So you can see that there's
a great deal of interest among our commissioners on these
questions. I was reminded by our transcriber, I forgot to
introduce myself. I'm Robert Pepper, Chief of the Office of
Plans and Policy. I'll be joined today by Kevin Werbach who
really, from our office, who really deserves kudos for
putting this program together and Elliot Maxwell, our Deputy
Chief of the Office, as well as other staff here from the
Common Carrier Bureau, Wireless Bureau and other Bureaus.
As I mentioned earlier, the forum is going out
live on the Internet in both audio and video. Beginning at
noon until 5:00 o'clock we have demonstrations in Room 845
of a variety of new band width technologies including ADSL.
We have a demonstration of the direct PC, MMDS access and
some other examples.
And also the transcript of the proceeding today
will be put into the record in the access charge proceeding
that Commissioner Ness referred to. So this will become
part of the formal record in that proceeding as well as the
NOI, the Notice Of Inquiry, that specifically relates in the
proceeding, that docket, to the ISP and Enhanced Service
Provider questions.
We'd like to make today informative and also
interactive. We will start with a presentation of the
various bandwidth technologies. We'll then move into panels
that are going to be discussion oriented. We'll be asking
questions. There will be opportunities for those of you in
the audience to ask questions. And we hope that the
panelists also ask one another questions since this is an
area in which there are no fast and hard answer, but lots of
questions which we all need to learn about.
Our first presenter this morning is Stagg Newman.
I'm missing page one of his bio. So I'll do it from memory.
Stagg, as he told me earlier this morning, received a
totally useless Ph.D. in mathematics. But since then, since
the mid-1970s has been first I guess at Bell Labs. Stagg is
responsible for work on fiber optics now with Bellcore.
Fiber optics, wireless communications, battery technology,
other band width technologies.
Battery technology is really fascinating. Last
night he came in and he showed me their new battery for his
cell phone. He gave me the battery and it didn't weigh
anything. And he showed me some plastic and it's twistable.
It's very light. And from my perspective it's a radical
breakthrough in battery technology. So Stagg is in the
applied areas at Bellcore working on all kinds of new
technologies that are going to help all of us in the
communications industries. But this morning he's going to
walk us through really a technology talk about these various
bandwidth technologies and try to help us get a better
understanding of what the test of the day is going to be all
about. Stagg.
MR. NEWMAN: Thanks, Bob and Elliot. I'd like to
thank you for inviting me here and basically -- I don't have
my glasses on. So I can't see which side says on and off.
Thank you for inviting me. What I'd like to talk about
today is the bandwidth bonanza and basically there's no
question in my mind that there will be a tremendous band
width bonanza for corporate America. We will see the same
type price performance improvements we're already seeing,
that we've seen in the computer world. That is a doubling
every -- you can argue how many months, 18 months, 12
months, 24 months, of the price performance characteristic
for obtaining bandwidth.
But what happens to the mass market? The mass
market is the key issue I think and that's a real challenge
for all of us, both from a technology side, from a
regulatory side and from an operations side.
Said another way, Bill Gates was quoted recently
over the Internet, of course, or misquoted, as saying in the
year 2000, 90 percent of all the users of the Internet will
still access it over dial up modems over the telephone
network at 28.8 kilobytes per second or in reality usually
less for those of you who have been on certain networks
recently. Unfortunately, our analysis is he's probably
right.
Where are we today? Today it's estimated
worldwide there are about 30 million users of the Internet.
So we have this large wave overtaking the communications
industry in ways that we can't understand. What I want to
do is put a context setting in what I think the evolution of
the Internet means. Basically replacing the universal
service we've had today, dial tone, with a new universal
service called IP dial tone.
And I think for, you know, say in the early 1990s
there was lots of debate over what the NII should be, okay.
And what it should look like and what technology should it
be? I think the Internet has answered that for us. NII
will be IP, that is the middle protocol in the Internet
stack, the Internet IP protocol, over networks. And the key
to really unleash the potential is having a broad band
Internet, having broad band access on and off the Internet.
Why is this so key? Basically, we're in an
environment where we've got a tremendous flux in services.
What are going to be the real services people will pay for
and drive this? And I think the answer is nobody knows and
they're being invented faster than we think. You know, is
it going to be just doing E-mail? Clearly not. Is it going
to be down loading video? Possibly. Is the network going
to be used in ways that we don't predict? Absolutely. One
of the early cable modems trials got into trouble because
they assumed a high asymmetry downstream which is the way
I've been thinking. Most of the data will come out of
content providers, downstream.
So in this particular trial, there was an MIT
professor who had a young kid at home. And at work he
wanted to be able to see his kid. So he put his videocamera
in his home, started pumping video upstream. Totally blew
the network out of the water.
So we'll invent all sorts of ways to do new
services and it's a very unpredictable environment. When I
started in the telephone network, we worried over whether
the voice network traffic was going to be 3.7 or 4.1
percent. It made a tremendous difference to the engineering
economics of the Bell system. Now network providers out
there are doubling their network every six months. A little
bit different ballgame.
At the same time, technology's in flux. We used
to worry about how far do you have to -- can you drive
copper pairs before you had to put in repeaters? Nowadays,
do you go with ADSL, XDSL, VHDSL, hybrid fiber coax, fiber
to the home, which is clearly a long term answer, but how
soon? Switch digital video? So there are a multitude of
technology choices out there.
How do you couple this technology with the
services without bogging everything down? And that's where
the role of IP comes into the network. In effect, in this
environment there's obviously tremendous amount of risk.
Risk if you're the network provider in putting the wrong
capital in and seeing that stranded very quickly. Risk in
the service provider if you assume certain network services
are going to be available. Certain capabilities and
performance, if it's not there, then you've developed your
services and nobody can get decent access.
So let me real quick high level toil on network
architectures. What we did in the past and in effect
learning from some of our mistakes in the past. Voice
network. We had a vertically integrated network. Services
were inclined with all the technology in the network. We
wanted to introduce a new service. We went into large
switching machines and developed new code for voice
services.
Pat White, who's one of our speakers, was
instrumental in developing some of that in the SS's.
Tremendous software development, long development time to
get new services out there. But a lot of them are doing,
you know, are tremendous service winners today such as call
waiting, call forwarding, et cetera. But the network, the
services, everything is tightly entwined. Furthermore, it
was analog. You know, traditional voices analog, it was
okay to have an analog network.
The next step we went to was ISDN. ISDN was
digital and is faster. So that's an improvement. But ISDN
still had service specific technology. You had circuit
switching. You had packet switching. And you design
circuit switches around the underlying technology. And that
worked if the framework was a monopoly environment where the
services would be provided by the monopoly carrier. And
ISDN came out of the standards environment, driven largely
by the view circa 1980 and the European.
Next we moved to ATM. We got closer to getting it
right, but still not -- and let me make it clear. ISDN I
think has a real role, particularly over the next five to
ten years. Because as you'll see later, getting a broad
band mass network out there quickly is a tremendous
challenge. And today almost all Internet services are much
better over -- well, they're all better over ISDN than over
POTS modem. And actually at ISDN speeds of 150 kilobits per
second. That will be adequate for most of the services
people envision over the next five years. Apparently that's
the view when we talk to people like Microsoft and others.
so I think ISDN does have a very important interim role.
ATM, which also came out of the telephone network
world, now has a single underlying transport packets and
cells and all that allow you to do a variety of services
over top of ATM. But it still requires, before you can
realize it, changing all the network out to ATM. Tremendous
capital impediment to doing that and it ties still the
service evolution through something called bearer services
through the underlying technology.
Meanwhile, the computer world developed the notion
of IP and a separation of the service layer through IP in
the middle from the underlying network layer. And that's
been one of the beauties of Internet is this simple protocol
set in the middle. People had developed all of these
services on top of that protocol and they can work over any
underlying technology. The only question is performance as
we'll see a little bit later. But we've separated the
service evolution, the competitive service market, from the
underlying technology and that's why I think IP and
internets and intranets will be the broad band network.
So then the real question is how do we provide the
best possible access to that competitive world of IP through
the competitive alternatives of access technology? The
result, adding new networks and services is low cost and
straight forward. At least adding new services is
relatively low cost. One can argue about the low cost
networks. For corporate America, for high speed lines, it
was fairly straight forward. For the mass market where you
have literally 100 million access lines out there, you still
have a challenge. But you decouple that evolution.
Another important corollary which will drive the
services, if you have services tied to a particular network
provider, those services will never reach the same market
mass that Internet. Internet will always reach more
customers worldwide than any other network because you just
have this narrow, well-defined protocol in the middle. So
if you're a service provide, you want to get your services
on the Internet to get market reach.
That, of course, means it will attract more
service providers, leading to more rapid service evolution
and therefore more pull for more and more network demand.
And what's going to happen on the Internet? In addition to
all the services we're used to using today, from E-mail to
any time I need to know about a corporation I go into their
web page, see what the corporate information's all about, to
images, all of these new services, games, et cetera, are
coming.
But I think there are going to be two important
additional services that says Internet IP really will become
sort of the universal service of the future. One is voice
and video. By 1998, I think you will start to see
substantive voice and video on the Internet. It's not
saying, I'm definitely not saying it's going to replace the
telephone network. But you'll start seeing these services
in a very real way.
Let me give you an example of one of the things we and
other companies are doing today. Voice mail and fax.
They're not real time two-way services. You're not trying
to talk and tell time when you're doing voice mail. You're
just listening, sending your message back. Fax is obviously
not a two-way communication. Although sometimes they fly
back and forth fast enough you think they are.
Okay. What's happening today? People take a
local server, dial up a local call through the local network
where basically there are no charges to minimal charges, to
a server. That server then takes the fax or takes the voice
mail, okay. Packetizes it. Puts it over the Internet, POTS
it out on a server say in Hong Kong or Taiwan if you started
in New York City. Then goes back through, dials up at the
other end through a modem and to the fax machine that set
the destination. And now service is available to take care
of all the intelligence.
So that to the user it looks like a normal fax
call. You just dial the fax number and send it. But what
have you done? You've avoided all triple -- all long
distance charges and all IDDD, all overseas charges. A
tremendous savings, you know. Well over the order of
magnitude savings. And to give you an idea of the impact of
this, over half the traffic today that goes overseas on the
telephone network is actually fax. That traffic is all set
to leave the current phone network and go on the Internet.
The same thing for voice mail. And I do know
people who are even doing voice over the Internet today to
overseas locations. They're willing to put up with the
lower quality simply because of the lower cost. And
particularly over corporate Internets where you can have
high speed back bones and you control the performance.
So what's our network of the future will look
like. Basically, I'm proposing a network that says you need
a broad band access network from the home. That's supposed
to be a fancy looking home with I guess they even have the
coffee pot into the network into the home. I think that's a
little fanciful. But we've got people at Bellcore who could
get into that. Your TV, your fax machine, et cetera. We've
got somebody at Bellcore who sits in bed at night with his
PC typing. So who knows? Techies.
Over the broad band network which then gives you
access either to today's voice network, which will still
have a very vibrant roll for a long time to come, or out
over the Internet. And this will become the universal
Internet.
Now, what are the obstacles to getting there? At
the risk of offending many very good engineers who are
trying to solve difficult technical problems, I think the
critical problem is the mass market access. The Ciscos, the
three coms, et cetera, of the world will make their routers
and switchers get faster and faster. In fact, a Cisco
router circa 1997 will have ten times the band width of the
largest voice switches in the networks today.
So the backbone switching technology will get
faster. The backbone fiber optic technology we and others
are working on will give us a 20 to 100-fold increase in
that very shortly through wavelength multiplexing. We'll
solve the traffic congestion problems. They are challenging
problems, but those are being solved. The competitive
marketplace will solve those. The real problem is how do
you solve the mass market access? And that's what we'll
spend the rest of the time looking at.
What are the options today? Today you've got the
Internet backbone network, Internet access points and ISPs.
How do you get on and off the highway? Well, if you're a
corporate user or if you don't mind paying $200 a month, you
can get a private line from your home or your office into
the network. And the private lines are getting faster, the
price performance is improving all the time.
So again, no problem here as long as you're
willing to pay a fair amount of money. But if you're not,
what are the alternatives? POTS? You know, 28.8 bit per
second, limited to 64 kilobit, but in many applications
those won't really be anywhere close to that. ISDN which
can get you up to 128 kilobits per second. They both have
the advantage that they work over today's copper network
just by putting something into the copper loop.
Then there's a whole family of what are called
digital subscriber lines, so-called XDSL, ADSL, VH or Very
High speed digital subscriber lines, et cetera. And I'll
talk more about those.
The other alternative's going through the cable
network. So those are the there alternatives and then one I
will talk about but don't show on that viewgraph is
wireless.
Now, to give you an idea what's that like and why
would this be better, I'm going to show a very short tape.
Elliot asked for demonstrations. Well, demonstrating access
technology is sort of like demonstrating a microprocessor.
Nobody cares what happens inside the microprocessor. The
applications are where the action is.
So this is just going to show a very simple
application downloading over four different technologies so
that you can see the speed advantages and why it becomes
attractive. If you could role the first tape. The first
one, and I'll explain what the -- the others are going to go
pretty quickly.
This is downloading an image over the POTS network
today. So if you want to download a busy image today, this
is what you'd see. And what you'll see is, yeah, you might
be willing to do it, but it's not the world's most
interesting thing to sit there and watch this slowly
download.
Now, in order to kill time, I could tell bad jokes
but Elliot told me he'd break my kneecaps. So what you're
going to see next is the same image downloaded over ISDN and
you'll see that that's quite acceptable. Then you'll see it
downloaded over a ADSL link and finally over a cable modem.
And what you're seeing at the bottom is the number of
seconds it takes to do the download.
AUDIENCE QUESTION: Do you know the file size on
that?
MR. NEWMAN: See me afterwards, I'm blanking in
real time on this image. But it would be a typical fairly
busy photograph. I could figure it out, but I'll do it
offline because I didn't memorize that data.
AUDIENCE QUESTION: Modem speed?
MR. NEWMAN: It's a 28.8. The question was the
file size. I said I'd have to address that offline. And he
asked the modem speed. That was a 28.8 modem functioning at
28.8. And this should be the ISDN. And you'll see that's
not bad. I sit there and wait for that on the PC.
In fact, I'm a horse person. Actually, there are
horse people now putting up pictures of their horses that we
download. Now what you'll see is this becomes real
acceptable. In fact, it takes longer to put up local
graphics than to download the image. Boom, okay?
Seven-tenths of a second. That's not bad.
And you'll see in this particular example cable
modem will actually beat that. So don't wink or you'll miss
it. Boom, okay. That's why we won't broad band access. It
will open up a whole new field of applications. Hopefully,
we killed the tape at this point. Yeah, good. Okay.
Let's examine these alternatives. First, let me
state the customer requirements. Well, we think the
customer requirements are -- and we get a lot of debate on
this first one, but ideally we think users want a flat rate
because you don't want to really worry about a meter ticking
while you're doing applications. Now, that has some
problems from the service provider side, but if you ask
users, flat rates awfully nice. User friendly.
It should be customer installable. I'm going to
say a little bit more about that because we have a real
issue. Competitive corporate America has to tackle how do
we get these signals around the home? I think it should be
as easy to use as the telephone network. I recently had to
convert at work from a Mackintosh to a Microsoft environment
and everything is not yet user friendly. I think it should
be as easy to use as the telephone network.
It should be non-disruptive. Right now, last
night I was visiting with Elliot and I went to use the
telephone downstairs not realizing his wife was on the modem
upstairs and guess what? Her connection was blown away. So
it should be non-disruptive to the TV and telephone users in
the home.
And finally, ideally what we want is an online
throughput. I believe 128 kilobits today would be a
tremendous step forward and that's what ISDN gives us. But
ultimately we'd need megabits per second. Said another way,
basically the cable industry's figured out the right price
structure. The telephone industry's figured out the quality
of service and the computer industry's figured out the
performance. How do we put them together and still make
money?
Let me start with a customer environment. This is
not a slam dunk, getting digital signals around the home.
Analog access has some real advantages. It's much more
forgiving than digital. We have done a lot of studies,
cable line did some studies and say getting digital signals
around a coaxial network in somebody's home is hard. It's
bad news. We did some more detailed studies at Bellcore and
found out they were far too optimistic.
Some of the problems you get into is when people
put in these coaxial networks in the home, they frequently
staple right through the coax. It doesn't bother analog TV.
It does wonders for digital signals. They leave things
unterminated like ports here. One of the early cable modem
trials, the network kept going down about 7:30 a.m. every
morning. I mean, everybody had noise and unacceptable
performance. It was very regular. What happened? There's
a woman who's very regular in her habits and every morning
about 7:30 she used her hair dryer right next to one of
these things. And her hair dryer spewed electromagnetic
noise all over the network.
So there are lots of issues in the home. And in
effect you need a home network. Now, for the average
Bellcore engineer, no problem. They go in and put a ten
base T network in their home. I don't think my parents are
going to do that. So we really need to solve the home
networking problem because otherwise we're going to be stuck
with using that telephone wiring and 28.8 modem.
I think this is a real opportunity out here for
corporate America also, but it's a tricky environment. Just
dropping this inside the current coaxial network environment
of trying to go to high speed, not that easy. And for those
who are interested, Bellcore and others have fairly detailed
studies of that environment.
Okay. So what do we do? Well, there are three
solutions out there. First is to use the twisted pair
that's out there today. Now, that has an advantage that
architecturally it's modeled after in the data
communications network what's known as twisted pair
allocations routing out of the wiring closet. That's been a
nice architecture because it's gotten rid of a lot of the
suggestions of shared bus architectures. So it looks good
and once it's in deployment, it works quite well. The
problem is all the deployment problems. You're no longer
just inside a building. You're going out over the telephone
network. What happens when the customer is more than say,
well, we're talking kilofeet which is a weird measure, but
ten kilofeet from the central office. You may not be able
to get the signal out to that customer without a lot of
additional expense. Some of the early ISDNs have gotten
into trouble because they filed the universal tariff
assuming a certain distribution of people because it turns
out once you get out about 10,000 feet from the central
office it costs three times as much to provide INSD as you
are close in. They assumed most of the people would be
distributed in the same population as the telephone network
users today. It turned out no. The people who really
wanted ISDN lived far away from the central office and want
to telecommute are the people who can live up in the canyons
in California, et cetera. So their users were all far away
from the telephone office. Capital expense far greater than
anticipated.
So that's one thing. The other thing is we put
this high speed digital technology out there. It starts
interfering with other technologies in the loop. So there
are a lot of performance problems to be solved to get this
out there economically and that's a lecture in itself. It
does get the performance out there and if the economics can
justify it, it's one way to the future.
When I first used this viewgraph, probably a lot
of the cable industry would have disagreed. But Don Malone
I think has even now been quoted publicly as saying in
effect these were cable modems. I think the hype got out in
front of the reality. And you'll see that in a demo a
little bit later. Again, there is constant problems here.
In the ideal environment, this technology works great.
But now you're putting in a shared bus environment
in a public network and there are lots of performance
problems to be solved. Furthermore, this only works when
you have a very high quality cable network out there. And
it has to be two-way capable. Less than ten percent of the
cable networks in the U.S. today fall into that category.
In this category, you get fiber out to the coax
and then you use your coax as your last distribution. The
problem again is you get a lot of noise in this type of
shared environment. So you have to have a very tightly
designed network without a lot of noise. You don't know how
much upstream traffic you'll have so engineering network is
tricky.
And so again it's one of these that follows the
rule of thumb. Engineers are always too optimistic about
what will happen in the next two years and that definitely
happened here and I'd be happy to talk offline with a lot of
the difficulties that need to be solved for this to be a
reality.
On the other hand, I think it's one of these
technologies where engineers always underestimate the impact
of their technology within a decade. So it's getting there,
but lots of problems to be solved.
Now, how about wireless? Well, I think we're
going to see some very interesting wireless solutions evolve
in the marketplace, particularly with all the spectrum being
granted. There are going to be some entrepreneurial people
who I believe will figure out how to use that spectrum for
very effective international access. Maybe at 128 kilobits,
not at the three megabits or something we want in the near
future. There are three megabyte solutions, but they have a
lot of limitations and economic -- are much more expensive.
But let's look at some of the practicalities. And what I've
shown here is an MMDS type environment. Although some of
the same lessons apply to a satellite environment. In this
case, the digital signal goes out over the air, into the
home. It has to be received in the home, processed, sent to
the PC and come back out over the telephone network. One
advantage of this -- one of the problems of this is you're
still tying up the telephone network. So you haven't solved
the problem of congestion on a telephone network that was
designed for five minute holding times and people like
myself go home in the evening, put it on and leave it on for
three hours, you know, I got down, eat dinner, do everything
else. But why disconnect and reconnect the phone line?
It's a free local call. Sorry for my friends in Bell
Atlantic, but we all do it, right?
But let me talk about some of the radio problems
that are subtle here. This is a digital signal. Digital
signals are fragile. What we found, the FCC in the same
lessons that they learned when they looked at advance TV,
ATV, apply in this environment. The person on one side of
the street gets a beautiful digital signal. The person on
the other side of the street, no signal. So what percent
coverage can you get? It makes a big difference if you're a
service provider trying to provide this service to know
whether you can cover 50 percent of the homes, 80 percent of
the homes or 100 percent. And can you predict ahead of
time? And do you have to send somebody out and do
measurements before you can serve them? It makes a big
difference in the economics.
This one's even trickier than that though. This
is a digital signal and you get interference. Therefore,
you may have to build a certain amount of what's called
adaptive equalization into this.
But suppose the customer's sitting there getting a
beautiful signal. Now, clearly since this is the line of
sight, somebody builds a tower across the street from them,
they lose their signal. It's more subtle than that.
Somebody builds a tower offline, not in their line of sight,
but offline so that they get reflections. Now their service
goes away. Okay.
How do you predict those type of things? So here
you have a happy customer. A year later somebody constructs
something. They're not even aware of it. And they lose
their signal. Then you have to go out and reposition their
dish or whatever.
So again, while this is not an easy environment to
work in, I do think there will be some good solutions and we
and others are working on that. I think it's really the
wild cared that may open up Internet access.
Let me just show you this in more real terms. We
have at Bellcore a test bed in which we can take the same
applications, streaming video, live media, et cetera, put
them through an Internet with routers, catchers and all that
and use POTS, ADSL cable modems. You know, this is a
working network with all these different technologies
employed. So we can deploy the same application over
different technologies, put network load on it and see how
it performs.
What we'll now show you is ADSL downloading a
video clip. So now you download the five minute videoclip
of your child or grandchild or whatever to the grandparents.
We'll do that over ADSL and cable modems. We're going to do
it twice. One is in a downloaded network and the other is a
loaded network. Could we roll the last tape?
Okay. So what you're seeing is a video clip being
downloaded and the cable modem's already done in eight
seconds and ADSL's going to take about twice that long.
Both those are pretty good. Waiting 17 seconds to then
watch a video clip on your PC's pretty good.
Now let's do the same thing. And now we've put a
fair amount of load, but we think a realistic load, on the
network. And this shows why the network engineering is
going to be tricky. If we could fast forward this up to
just before the ADSL and I'll tell you when to go back to --
okay, what you're seeing now is under a reasonable network
load, that's now gone to over a minute.
Okay. Slow it down for a bit. Okay. I think
it's just -- is it just under two minutes? Yeah. What
you've seen now is in this particular load because of the
shared nature of the cable modem in this example, the cable
one is only halfway there. So what went from under ten
seconds is now over two minutes. Why don't you go ahead and
speed it up to the end? I think it ends up around four
minutes.
Okay. Real quick. Where will the prices come out
on this technology? This is the price per customer for
capital costs assuming the cable network and the ADSL
network are already in place and you already have an MMDS
network in place to provide video service.
So this is the incremental capital cost. Is this
accurate? I don't know. If I had to make a pick today,
this is my best guess in reasonable volume deployment. And
one of the implications here is all of these are greater
than $500 per customer. So if we're trying to solve, you
know, serve the mass market, a non-trivial capital
deployment problem, we multiply that by 100 million
customers. And as I said, these prices are best picked.
They'll change over time. But that is I think is reasonably
optimistic when you're down the growth curve.
Everybody's taking that down. I'll deny I ever
said that later if you take it down. Okay. I promised
Elliot and Bob to keep it down to about a half hour. So let
me just for those who want I'll talk with you offline. But
basically, I put up the user requirements earlier. And what
we see is none of these really meet the ideal user
requirements.
So we've got to face up to what are the
compromises? What are the price performance? In fact, the
ultimate answer is going to be fiber to the home. And I
believe within five years that will be the economic choice.
But it's not here yet technically and now you're talking
about totally rewiring America with fiber which Corning and
companies like that would love. But that's again a large
capital expense.
On the other hand, I think what you can't do is
sit on the sidelines. It's clear to me that because of
what's happening in the Internet, it will increase the
capital outlay if you're in the network business. It will
increase your expense to serve these customers if you're a
network provider. And if you do it -- and it will change
customer perceptions, for better or for worse. If customers
can't make telephone calls because of Internet congestion,
that's going to change the customer's perception. The same
thing's true in the cable industry. Ultimately, if you do
it right, I think it will be a significant increase in
carrier revenue.
What should we do about it? Develop service
independent loop technology so the services don't obsolete
the network, drive the industry towards IP dial tone. Start
deploying these new services towards getting experience
because any new service introduction takes at least a
decade. But now's the time to start getting experience.
And finally, I think what we're going to see is the surfing
the net worldwide we'll probably see 120 million users.
It's a terrific market to reach. And what you see is that's
now become a tidal wave. Thank you, very much. [applause]
MR. PEPPER: Thank you, Stagg. What we're going
to do is we're not going to take a break other than to have
somebody come move the podium. And we're going to invite
our panelists up. A couple of things of a housekeeping
nature.
One, since we don't really have time for direction
questions of Stagg, we're going to ask Stagg to sit up here
with us. I imagine a number of the panelists including
David Reed from Cable Labs might have some comments on some
of the things that Stagg said and we can involve Stagg in
the discussion.
Second, please because we're transcribing this,
please use microphones for asking your questions so that we
can actually get that over the net as well as transcribe it.
And then also we would be putting up on our web site, the
FCC's web site, the transcript of today's proceeding. Plus,
if Stagg promises to get us the graphics electronically,
we'll put all of the viewgraphs up on the web site as well.
So if I could invite our panelists up and see
whether we're going to have somebody -- I don't think we
have any other viewgraphs. If we could get rid of the
viewgraph machine.
Our first panel, Jeff is the mike on? I think it
is. Our first panel we've asked to focus on competing
models for higher band width. We're very, very lucky to
have the group that we have with us. Les Vadasz is Senior
Vice President at Intel. For those of you who follow Intel
on the computer industry know how important Les is to the
entire computer industry because of his importance at Intel.
He's one of the real deep thinkers there. It's always a
pleasure to see you.
Pat White is Vice President for Research and
Development at Bell Atlantic and prior to his current
assignment he was VP in the Strategic Planning Organization
where he had responsibility for telcom strategy. Pat is an
engineer, has his Ph.D. in engineering from Northwestern.
Pat has been in our early discussions and inquiries into
this issue has been extremely helpful to us in understanding
the local exchange network architectures and how they are
having to adapt to data services.
John Curran is the Chief Technology Officer at
BBN. Of course, BBN is one of the parents of the Internet.
Doug Morgan is Vice President of Marketing for Winstar
Communications. And Doug we asked to come specifically to
talk about some of the wireless issues that Stagg raised.
and Winstar, of course, is really developing a brand new, a
business for providing wireless access to networks. And, of
course, we see this as being I think maybe Stagg we wouldn't
call it a wild card. We see this as really one of the
exciting alternatives to solve some of these band width
problems or questions.
And then finally, David Reed who was here for a
number of years as a highly valued colleague. And we were
extremely sad to see Cable Labs lure him away. But I think
it was more the environment of Boulder, Colorado that lured
him away. And this was actually a very wise choice.
Anybody who is faced with the decision of living in
Washington, D.C. and living in Boulder, Colorado and didn't
choose Boulder, Colorado, we'd have to question his sanity.
But David I think is very sane.
And by the way, David was critical in many of our
decisions in the PCS proceedings here developing what was
really the only technical model of demand on band width and
on market projections and he turned out to be very, very
accurate. So we always rely very heavily on David's advice
on issues.
There's no particular order here. We've asked
each of the panelists to start off with two or three minutes
so that we can get this discussion going. So why don't we
just start with Les and move right down the table. Les.
MR. VADASZ: I guess this is on, is it? Okay.
I'd like to thank you for the opportunity to participate in
this broad band forum. I think this is a very timely event
and I'm glad that I have a chance to address this issue with
you.
Intel is a major supplier of microprocessor
components and systems and particularly to the personal
computer industry. And we are very familiar with the needs
of this user community and this will be the basis for my
remarks this morning.
Let me begin with the obvious. A consumer wants
to use their PCs to communicate. I think that the enormous
growth that we have seen in the Internet access and the fact
that electronic mail has now become an integral part of our
everyday life is a very good indicator of this trend. And
if you look at how consumers buy personal computers,
virtually all of the personal computers that go to the home
come equipped with a modem these days. We are living in the
information age and the consumers participate in that by
using their PCs. Millions and millions of homes are online
already.
Unfortunately, despite the government's call to
build a national information infrastructure and despite the
Telecommunication Act of 1996, the personal computer user is
more of an after thought in all that happens when it comes
to deploying network capabilities. This is a rare
opportunity to address some of those issues.
What is our problem in effect is there is no
meaningful PC communications service available. And that's
kind of obvious. The consumer can purchase many services.
He can purchase electricity services, gas, telephone, TV,
and in fact the FCC has addressed many of these consumer
demands over time.
But we cannot buy a reasonable PC communication
service. We merely piggyback on the telephone service and
get a very inadequate connection. I think that we have
heard earlier that there are many technologies available to
solve some of that problem and certainly an Internet
connection through a telephone line and a modem is not one
of the adequate solutions for the future.
This is happening in spite of the fact that nearly
40 percent of the U.S. homes -- that's nearly 40 million
homes -- have personal computers. So any numbers that you
add up in this arena is going to be big financial impact to
all considered.
So what are these basic communication services? I
think it's important that we characterize this and band
width is only one of the elements. I think Dr. Newman did
an excellent analysis of what are the various
characteristics and I believe I will be redundant in some of
my discussions of those, but he characterized them well of
what the consumer needs.
First of all, high band width. There are many
technology choices. Virtually every service provider has an
opportunity to upgrade their networks with new technologies
to provide more meaningful PC communication services.
Second, instant access. It is unacceptable to
wait two minutes to connect to a network. You wouldn't
accept that from your TV. You wouldn't accept that from
your local area network at work. There is absolutely no
reason that you should accept that in your home environment.
Third, plug and play service. It ought to be easy
to just take your computer and provision a service. We are
not there. Most of you, many of you who have tried to
connect through services like ISDN I'm sure know the
problems that you go through in trying to provision a
service for your PC.
Fourth, multimedia capability. Voice, video and
data communication ought to be seamlessly integrated into
the service.
Fifth, store forward capabilities. Voice mail,
electronic mail, fax and other store forward capabilities
ought to be service offerings.
Sixth, security. Security options ought to be
available because both electronic commerce and workplace
connection requires protection from intrusion.
Seventh, affordable pricing. What's affordable
pricing? Well, telephone service is affordable. We know
that. TV service is affordable. We know that. I believe
that a PC communication service has to be in the same order
of magnitude as those services available.
Now, with these characteristics in mind, a
meaningful communication service need to offer the
following. First Internet access. As Dr. Newman said, this
is baseline. This is the digital dial tone.
Second, multicast broadcast services. News and
other information services ought to reach the user when they
happen. There are many technologies occurring, happening,
that allow you to deliver these kind of capabilities.
And third, our connection to our workplace through
a modem is inadequate. We need these capabilities and we
need telecommunication services offered through this
infrastructure.
Now, volumes have been written about the economic
impact of the Internet and all of these in my opinion depend
on deploying a meaningful baseline PC communication service.
And the economic potential of this service in my opinion is
enormous. If you look at the 40 percent of our homes,
40 million homes with personal computers, a baseline service
should represent in excess of $10 billion revenue.
On top of that, if you think about the investment
that both the consumer will make and the equipment
suppliers, the service providers will make, there is a
significant equipment business associated with this as well.
And we know that the consumer will pay for value. The
current investment rate, current demand for PCs for the home
and rapid increase, rapid demand for satellite TV services
is indication that the consumer will pay for quality
capabilities.
Now, I do not intend this to be a call for a new
set of regulatory regimes. And in fact, I don't even intend
this to be a call for some technical specifications to
deploy the services. I believe that it is the industry's
job to do that.
However, I would hope that the Commission when it
faces the issues that it struggles with looks at these
capabilities, looks at this PC communication service needs
and makes those decisions with those issues in mind. How
will our decision impact the development of these PC
communication services? What will the service providers do
as a result of our actions? How will a competitive market
be developed where different service providers using
different technology means are going to compete for the
dollars of the consumers.
Those are critical decisions that I believe are
going to impact how the future national information
infrastructure will develop and how the economic benefit
from all this technology will develop for all of us. Thank
you, very much. [applause]
MR. PEPPER: Thank you. If we could also try to
keep these statements to two to three minutes. Otherwise,
we're going to run out of time for any discussion. Thanks.
John.
MR. CURRAN: Good morning. I'm John Curran. I'll
keep my comments brief. This will be facilitated by the
fact that I'm from Boston and I speak rather quickly. If
you need to catch up, there will be transcripts I'm sure
somewhere.
Basically, my job would be to live between 12 and
24 months out in where the Internet is today. I used to try
to live three years out, five years out, seven years out.
Now if I can keep 12 months in advance, planning and where
we're going I consider myself lucky.
The fact of the matter is that the Internet is one
of the most remarkable changes that's come across
telecommunications to date. And I want to highlight how the
Internet works for this forum to describe some of the
interesting cultural differences that are happening and
things that we need to keep in mind when we try to look at
the issues of access reform and how we're going to bring
about broad band infrastructure for everyone to use.
In the U.S. alone, we have over 3,000 Internet
service providers. You know of probably, oh, the top ten of
them, the people who run some of the national backbones.
But you're probably not aware of the other 2,900 that are
out there. Some of them are in every community. One of
your next door neighbors almost certainly is an Internet
service provider.
The fact of the matter is that the Internet
service industry has grown at such a dramatic rate and had
such remarkable success not because of the degree of its
coordination at the end, the amount of architecture that
we've put in place, but in fact the exact opposite. The
Internet is an example of success in decentralization. The
fact of the matter is that in the Internet we work in a very
simple basis where we standardize and we work on cooperation
on the bare minimum facilities necessary to keep things
communicating and leave the rest to an open market model.
Just to give you an example of this, over the last
three years, the Internet has gone through three different
backbone models. We went through a model that we had one
single nationwide backbone. We went through a phase in time
where we had several nationwide backbones of large IP routed
networks that were interconnected through a few key
locations and most recently we've actually gone to a model
where the major backbone providers, providers such as some
of the inter exchange providers BBN and others have built a
model where our backbones are interconnected in multiple
locations.
Those are three dramatic changes that happened in
36 months. I can't emphasize more strongly the fact that
the Internet has to be able to evolve rapidly and in fact
what we're really looking for going forward for the ability
to continue to evolve the Internet is to create the same
market conditions in areas such as local access that have
existed in the abilities to purchase wide span high speed
broad band communications.
If we have that open market, the Internet service
community, and I mean thousands of entrepreneurial
businesses, will explore every backbone model possible, will
explore every access architecture. We will see a rich
tapestry of these coming forth.
The fact of the matter is that the Internet
service provider industry is using the infrastructure as any
other business. Today there are corporations out there that
have hundreds of dial up lines and there are bulleting board
servers and others who make use of local access circuits and
local switching infrastructure.
The Internet service providers have done the same
thing. They are looking at the rates that have been
provided and they're trying to do what makes sense. I don't
think there's an ISP out there that doesn't want to pay
their fair share of the cost involved in servicing that
infrastructure. It is not a case that there's an industry
looking per se for a free ride.
What you have is you have a case of certain pricing in
place and people trying to do the best business decisions to
deploy it.
Now, clearly there are some hard issues here. We
have a situation where all of these pricing, all the pricing
for local access has been setup with certain assumptions
such as loading rates and busy rates that no longer apply
because of the popularity of the Internet.
To this end the fact of the matter is we need to
fix some of those basic underlying economics. We need to
make it such that the price of a local access loop and the
price, for example, of going through the switching
infrastructure is clear to the industry. So that they can
make intelligent decisions about some of the technologies we
saw presented earlier today.
I can't think of a better way to decimate an
industry than to establish an artificial form of cost
recovery for these functions. The fact of the matter is
that the FCC in its wisdom has already undertaken open
interconnection activities which will over time provide a
way for this robust industry to look at the complete
components that it's using and make sure it's paying the
adequate cost.
And if indeed there are areas where the current
models don't make sense in a different architecture for
surfers, whether it's different service architecture or
different technology is necessary, these will be made
naturally by a robust marketplace.
I asked that this forum and the Commission in
general take these comments into effect when going forward.
Because what we have here is a remarkable success which
under the appropriate forms can be turned into a remarkable
opportunity to deploy new technologies and to harness the
incredible dynamics of the information in advancing
technology and communications to the mass market.
If we should make a mistake of trying to architect
a particular reform or a particular solution on behalf of
the entire industry, I think we can safely predict that the
robust entrepreneurial vision of the Internet won't be able
to be harnessed and in fact we'll lose that energy going
forward. That concludes my remarks. Thank you. [applause]
MR. PEPPER: Thank you.
MR. WHITE: Okay. I guess it's my turn. I'm Pat
White from Bell Atlantic. Is the microphone on? Thank you.
I know that from the previous comments from Stagg Newman and
others on this program so far that the rest of the comments
have tended to focus on the access to the network being the
focus for most of the problems.
Well, I'm in Bell Atlantic. I have access to a
ten megabyte LAN within the company premises. And this LAN
is connected to the outside world over a T1 or T3
connection. And I can say when I'm downloading the files
I've never ever seen my PC record anything approaching even
a megabyte per second. It's usually a few kilobits per
second at most that you get.
So clearly, no matter what we do with access,
we're still going to have a significant problem accessing
the Internet. And in fact, if you start to carve things up
a bit you'll find that a lot of problems exist in the
firewalls in the premises. A lot of problems also occur
within the PC. Because as my friend at Intel keeps
increasing the processor speed, Bill Gates keeps using it up
with more and more bloat ware. So the amount available to
actually handle all of this processing is very, very small.
We also have congestion on the Internet because
with the kind of structure that the Internet has, with
everyone engineering their facilities according to their own
rules, there's no end to end performance or end to end view
of the Internet. We find that there are a lot of times when
you could experience packet loss going in excess of 10 to 20
percent on some occasions in the Internet.
And finally, there are the servers on the
Internet. They're also heavily congested too. So what I'd
like to offer here is that instead of focusing excessively
on just one aspect of the Net we begin to think about it
more expansively, more globally. There are a lot of things
that have to come together before we can see the performance
capabilities that Stagg Newman talked about.
I couldn't agree more with my colleague at Intel
on the needs for the PC. I agree completely with him. We
need Internet access. We need multicast and broadcast
capability. We need some kind of direct connection. And
furthermore, I'd want more. I think you also need to have
continuous connection available at all times.
The only problem I think right now, in fact we
know how to solve a lot of these problems, both the cable
industry, the phone industry, wireless companies and others,
is the real question in my mind is who's going to pay for
it.
Clearly, there are forces who believe that the
vast majority of telephone customers who don't use or need
these capabilities at least at the present time should all
pay more than their fair share. And I think that we really
have to examine that carefully.
It seems to me that as a minimum the cost for
providing these services should be more focused on the
people who are actually using, accessing the Web. We might
have 40 million people with PCs in this country, but if you
look at Internet access or online access you find it's less
than 15 percent of households in the U.S. today who ever
access the Web. So should the rest of us who don't need or
use these capabilities have to finance the 15 percent who
need to access it? That's the end of my remarks.
MR. MORGAN: Good morning. I agree with Pat too.
You have to take a look at this thing from a total network
perspective. And on Stagg's comment about the wireless
being the wild card, very frankly, I'm just glad that the
industry has moved. You know, a year and a half ago if I
was sitting here in this chair, you wouldn't have heard the
word wireless. And now with a company like Winstar that can
serve 150 cities around the U.S., possibility of a million
circuits of DS1s, people are looking at us and saying, these
are a real part of the network.
So I'm glad to be mentioned. You can kind of tell
me whatever I want. Just keep mentioning us a whole lot
more. We're really happy about that.
Let me say a little bit about what Winstar does
and we are the company that really has the largest
experience base as far as providing broad band access using
wireless technology. Our businesses that we provide
services and technologies that really complement the local
carriers by providing them local access communications using
a bit of different technology. that being broad band radio
communications.
We also take maybe a bit of a different view than
some of the carriers. and I've had experience on both sides
of the house. Mr. Hundt in his comments this morning talked
about the last mile. A lot of people talk about the last
mile. My view is if the consumers are really going to come
to the fore and get what they need to move their businesses
and their homes forward, we need to think about this as the
first mile. Take a different view of the network. How do
you get that first mile connection into this wealth of
information that's out in the backbone? Let's take a little
bit different view of this thing.
As I said, we use a bit of a different technology
here. We're using 38 gigahertz spectrum with digital broad
band radios to get the connectivity. And from the
standpoint of where we are today, Winstar is operational
today providing service really to a variety of people in the
industry from caps like ACSI and ELI and Brooks Fiber and
the range of competitive access providers as well as long
distance carriers like MCI, Arbucks. I think that we have
Pacific Bell on the panel in the next session is a client of
ours also.
So we provide a number of services to the carrier
marketplace today. We do know how this stuff works. We
know how to go in and we do know how to make it reliable and
I'm sure that we'll get some questions on that.
I had mentioned capacity. There is a tremendous
amount of capacity available within this 38 gig spectrum
that we have. We've done calculations within our major
markets that we can provide well over a million DS1s of
capacity over the next couple of years within our major
markets alone. So there's a huge amount of capacity
available.
I also agree that you have to take a look at this
at a whole network view. The intrigue of wireless is really
quite simple. It's an incredibly fast time to market. the
capital gets optimized because I'm not digging up streets
and houses and everything else. So you don't have any of
the construction costs. I never have stranded plant. If
bodies and people and buildings and businesses move around,
I don't have stranded plant to worry about.
So all of those benefits are a tremendously
appealing case for wireless. You still have to take an
entire view of how you role a product out to the
constituency to make sure that you can keep the five nines
of reliability that we built in this network that runs this
country. It means you have to understand network
engineering, how you provision your services, how you have
your logistics in place to spare all of these and everything
else.
So what I'll say for all of our folks that are in
the technology world, and I've had the benefit of working
with Intel and actually quite a bit with Cable Labs in a
prior life. The technology here, we have the greatest
technologists in the world that sit in this country and many
people sitting in this room today.
The technology isn't the issue. The issue is how
do you deploy this and keep a network that runs end to end?
How do you provision it? How do you maintain it? And how
do you manage it?
So what I'll say to everybody that's sitting here
in the room is you can get very excited about the technology
and about the promise of the technology. The hard work
becomes how do you deploy it in an end-to-end,
cost-effective solution to bring services to the people? We
think we have an incredibly important part of the solution,
but we all need to work together to bring it to the people
like you that need these kind of services. Thank you.
[applause]
MR. REED: Well, Bob, with two or three minutes,
one of the results of moving to Boulder is that I do speak a
little slower I think in contrast to my earlier colleague.
I wanted to comment a little bit on the presentation earlier
by Stagg Newman that set the paradigm as being IP dial tone.
And perhaps I'm still hungover from my video dial tone days,
but I don't like the term dial tone.
The paradigm about the cable industry I believe
will likely be a winner here has got nothing to do with dial
tone or any connotations that might be associated with that
term. And what I'd like to do is to address some of the
technological characteristics of the high speed data service
delivered over cable systems. And specifically I want to
make two points. One is that the shared access network
architecture delivers several key benefits to subscribers.
So from the other presentation I'm going to spin
that entirely on its head. I do believe, like I said, I
think the cable industry is a winner with the shared access
architecture. And as a result of the benefits you get with
that approach, the performance of cable based high speed
data service will far exceed most Internet access service
available over telephone lines. And to that we all agree
from the earlier presentation.
The second point is that the cable based service
for high speed data is being offered today in several areas
and the overall deployment that is accelerating. Those who
do have it commercially available are somewhat looked upon
as the privileged few now I understand. But it is being,
the roll out is being accelerated by many of our member
companies. The next result to date of that roll out is that
the subscribers are very enthusiastic about the service.
The modems work well. The system works well. And it's a
positive experience. And so I think you'll continue to see
that roll out. So those are two important points.
Now, turning to the benefits of the shared access
medium, what are they. Very briefly, what I mean by the
shared access to begin with is in contrast with the
dedicated switched network paradigm that you had over the
telephone network today that's a single high band width pipe
that's shared among users. In the context of the cable
industry, you're talking anywhere from 10 megabits to 30
megabits that will be shared by multiple users. And because
it is shared and there is a need to set rules to share that
band width in a fair and efficient manner.
And that set of rules is often referred to as a
Mac layer, the Mac protocol. And the Mac stands for Medium
Access Control. That's the true performance enabler here
and that's what really causes the performance to be
substantially better with this service.
So the benefits of the shared access, one, is it's
well suited for the bursting nature of today's Internet
traffic. If you look at how the traffic varies if
somebody's surfing the Web, they need a very high transfer
rate for very short period of durations. The picture we saw
earlier had burst. And to the extent to which you have the
band width available to accommodate that, it can be served
up very quickly. And in fact with 10 to 30 megahertz per
second, the band width you have over a cable service is
faster than your PCs can handle today.
Now, with Gates laws we discussed earlier, that
will probably change. As there's availability, it will be
gobbled up. But to be sure right now it's quite a bit
faster than what PCs can do today.
And at Cable Labs we've modeled a 60 second surf
and in fact I don't have it available with me now, but if
anybody's interested give me your card or contact Cable Labs
and we have a little primer on cable modem performance. I'd
be happy to share that with anybody that goes through
exactly how the performance of a cable modem will operate.
But the traffic itself because the bursting lends
itself, the good news is that it lends itself well to what's
called statistical multiplexing. And so that means many
more users can use and share this access pipe than just
dividing the band width up on a dedicated basis to each
user.
So that's the first benefit. Second is that the
cable's large band width permits excellent performance. In
its primer, for example, up to 200 simultaneous users can
jointly do this simulated surf with no degradation in
performance. Now, this architecture I'm talking about is
the target architecture that the next generation modems will
be operating under. But that's where the cable industry is
going.
And under the loading scenario, if you double that
to 400 simultaneous users, that takes twice as long to
complete. So if this is a 60 second surf, it takes one
minute with up to 200. If you move it up to 400
simultaneous users, it takes two minutes. And that's still
faster than 128 kilobits per second ISDN.
So clearly the performance here is quite acceptable.
The third benefit is the cable network
architecture delivers a scalable approach. We're not
talking about two simultaneous users over Washington, D.C.
We're talking about 200 simultaneous users over one fiber
node. And the hybrid fiber coax architecture of the cable
system. And those nodes are being designed typically now
anywhere from 500 to 2,000 homes. So you can go through the
numbers there. You can see that you need quite a heavy
loading for you to start experiencing any degradation in
performance.
Fourth benefit is that subscribers can stay on
line and not consume network resources. So for E-mail
perspective, hopping on to get information quickly, it's no
problem with the shared media approach. Another benefit is
that our users are connected to the same information pipe
and therefore broadcast applications can be efficiently
offered. So the streaming audio and video, for example,
from this conference to the extent someone wants to view
that or more than one user wants to view that on a
particular node, with the multicast capabilities that are
being built into the Internet, you're going to be able to
efficiently provide that. So that's in a small way doing
some future proofing in terms of the new services.
The final benefit here is that designing the
architecture to the extent it's possible and no one's a
perfect predictor of the future to accommodate the new
services. The Mac software will be downloadable. With the
HFC architecture, you have ways to scale capacity to meet
the need.
So the upshot here is the cable industry thinks
this looks like a real market winner. Because the real
benefits are tangibly better than what you can do today.
Second key point quickly is that the service is
rolling out today. The customers are very happy with the
performance. By Cable Labs count, there's over two dozen
vendors who are building, in an advanced state of building
cable modems.
Future direction. Cable Labs has been
participating in a specification process that will help put
out a standard cable modem so that we'll be in the paradigm
where you'll be able to take the modem from across cable
systems throughout the country and that's very far along.
Vendors are commenting on that. It's already been proposed
to the vendors and they're coming back to the cable
industry.
So that is nearly complete. Several of our member
companies have the commercial services available and they're
really too numerous to list at this point in time. To be
sure, different business models are still under
consideration and we're still developing system-wide
considerations and solutions to address the band width that
the last mile you do have to address the other parts of the
Internet.
So in summary, the two key points. There are very
substantial benefits and we think this is going to be a very
dominant paradigm in the future for how folks will use the
Internet. And it is happening and does take time to roll
out. There are a substantial number of folks who use the
service today.
MR. PEPPER: Jeff, if you could just leave the
mike's on the tables now that would help. When we get to
the questions, there will be somebody I assume with a
microphone who will walk around and people can ask questions
into the mike. Is that person in the room yet? Great,
thanks.
Maybe I'll start off with the first question. I
think it was John who said, maybe it wasn't. It was
somebody -- I think it was John. Technology's not the
issue. Or maybe it was Pat. It was Pat. Technology is
here. David said it's a matter of time. If it's a matter
of time, how soon? I mean, realistically. And if it's not
a technology question, is it a market question? Is it a
competitive question? Are there regulatory issues? Are
there things that are now in the regulatory process that are
impediments to the deployment of these technologies?
Because I think these are the kinds of questions
that people are asking. We're certainly asking ourselves.
Does anybody want -- Pat, do you want to start off with
that?
MR. WHITE: Okay. I'll start off with that, Bob.
Within the Bell Atlantic region currently, some 98 percent
of our central offices are capable of providing ISDN
services. And we are indeed marketing ISDN services pretty
aggressively. We also have done trials of ADSL1 which is
the version of ADSL that Stagg Newman talked about earlier
which is the 1 1/2 megabyte version.
We are also planning to deploy ADSL2 which is a
six megabyte version of ADSL. You know, those
considerations are underway right now because the technology
is available to support up to six megabits downstream to the
customer.
One of the, and I guess I should also point out
that we have an SDV, Switched Digital Video trial going on
as we speak in Dover township in New Jersey and there is a
more up to date system being planned for Philadelphia. With
our switched digital video system, we will be capable of
delivering up to 52 megabits over a twisted pair, very short
twisted pair distances directly into the home. So some of
those things are beginning to happen.
However, there is an element of risk I should
point out. Because investments in the network like any
other investment, maybe unlike most investments, tend to
have a pretty long lead time. You know, there's a lot of
money, a lot of construction to be spent. And generally,
you find that consumers are more interested in a new
capability when a lot of people have the same service.
Communication services generally have that property.
They're useless for one person. But millions of people
they're more interesting.
So we need to see or at least we need to have
regulatory policies that are consistent with the fact that
you have to basically lay out a lot of money over a long
period of time before you begin to see a return on that
investment. And the extent that the regulatory framework in
fact we're still trying to struggle with the implementation
of the Telecommunications Act to the extent that that
increases the risk for new investments, then I think that
could have an impact on the willingness of operators to
basically aggressively deploy SDV or ADSL technology.
MR. PEPPER: Les, you're shaking your head.
MR. VADASZ: I have a more pessimistic view of it
obviously. I think if you look at our telecommunication
carriers today, they spend more significantly, orders of
magnitude more effort in trying to get into each other's
business rather than trying to develop new business based
for PC users. And this issue of who pays, well, in real
businesses, in real competitive markets, you have a right to
compete and you have to earn a return. You have to put
capital at risk. And what we would like to see is the
communication carriers recognize the PC user as a real
viable economic opportunity. I guess that's what I --
MR. WHITE: Bob, can I respond to that?
MR. PEPPER: Pat. Yes, please.
MR. WHITE: Bell Atlantic currently spends in the
neighborhood of $2 billion a year every year on new
construction and maintaining the network equipment within
our territory. I would hardly say that that is compatible
with not investing in the network and looking elsewhere for
returns. Indeed, we spend most for capital right here
within the states that we currently serve.
MR. PEPPER: Doug, I was just actually going to
ask Doug, wireless, you pointed out that long lead times
were maybe not the same in wireless. You can have more of
an incremental approach. You don't have to worry as much
about stranded investment. How does wireless and your
business plan?
MR. MORGAN: Our paradigm is much, much different.
And today we're serving business communities and
multi-dwelling units. We're not at the residential level.
But I certainly assume when this technology comes down we'll
be able to spread that. But where the technologies play out
if you look at the cost of any access provider to go into
the building, today it's somewhere between $40,000 and
$100,000 depending on what city you're in and how much
construction you're in and everything else go into that
building.
And I can understand -- Bell Atlantic saying I
don't want to spend $100,000 to go under a building. Our
approach is much different. We put a 12 inch dish on the
roof, a couple of small radios inside and I have access to
the building.
So we're actually a unique competitive advantage
for the carriers that we work with that they can use us to
go into buildings to get entry to provide high capacity
services and quite frankly if the carriers find that after
they're in a building that there's enough capacity that
warrants putting fiber in.
We're a big believer in fiber. We use fiber
ourselves to connect the nodes together. We think it's a
tremendous technology, just not financially feasible if you
have to build it on a building and hope that it will become
kind of a model.
So we give people a unique advantage. They can go
into a building when there's enough capacity that they want
to go ahead and build fiber behind us, they can go ahead and
do that and we can take our plant and move it somewhere
else. So we see ourselves as a real enabler to move some of
this new technology forward with a much different financial
plan than anybody else has in the industry.
MR. PEPPER: Now, there's a question Stagg raised
about wireless and its ability and interference
characteristics and potential problems which leads to the
question of the network liability issues that the Chairman
raised.
MR. MORGAN: Sure. I'd be glad to address that.
As the largest provider of these kind of services, I won't
tell you that we haven't had a learning curve as we've gone
through this. If you take a look at vendor literature that
talks about a 38 gig range, four and five mile distances and
things of that sort, it will certainly work on those kind of
distances. It won't work to the level that any of you will
be happy with.
So we have found that the nice point about the
technology in our range is it's very much a point and shoot
technology. This is not difficult. If you have line of
sight, we can do a distance.
The real thing we've had to find out is you have
to make sure that you keep your distances short which means
that depending on the region of the country that you're in,
somewhere between a mile and a quarter to a mile and a half
to a little bit longer as you go past, if you want to keep
the five nine path reliability.
Physics are physics. They haven't changed in 100
years. And the real thing you have to do is make sure that
you have to keep the paths right.
So once we have gone through the proper types of
network engineering, you'll lay out your connection points
in such a manner that you keep all of your paths short. And
that also reduces the reflection and other people getting in
the way of it.
Once you do all that, you can build an incredibly
reliable robust network, but you have to understand the
engineering pieces and don't believe all the things you read
from the vendors.
MR. PEPPER: John.
MR. CURRAN: Let me pickup on the Internet
reliability issue. Certainly there's a real issue here.
We're in a situation because again of the wide number of
providers going forward and the very diverse technologies
being used to deploy this, where we have different standards
of reliability. In fact, there are some pieces within the
work that I'm sort of pleased have different standards.
The Internet has made it into countries where 386
PCs are state of the art, where the modems are older than
many of my staff. And the fact of the matter is that the
Internet is unique in its ability to connect all of these
communities.
There are rural networks out there, for example,
for educational purposes that wouldn't meet the requirements
of my business customers. I have 3,000 business customers
connected to the network. They have very high requirements.
That doesn't mean I don't want to connect to those other
networks.
You have to recognize when we talk about ability
that we want a core network that is very robust, but the
Internet accommodates almost anything from multi gigabit per
second links all the way down to 1,100 baud VLF
communications. That's all on the Internet somewhere.
So I think it's important -- two things to keep in
mind. First that when we talk about Internet reliability, I
don't think we want to talk about ubiquitous in that
reliability until we're sure we're willing to pay the cost
for every corner of the Internet, where the Internet today
is still going to corners that are fairly rough.
The second item was just the fact that the
Internet technology's changing very rapidly. I routinely
run into people who are waiving around 15 year depreciation
schedules and 30 year depreciation schedules. And I think
about the fact that we're doing doubling every year. We're
doing upgrades on a 12 to 18 month basis of all our key
technology.
I think that there's going to be a period of time
when the Internet settles down and those periods lengthen
out, but it isn't today. And I think that it would be wise
for the Internet to have one-tenth the number of years that
the telecommunications industry has had before it has to go
tackle the reliability issue right now.
MR. PEPPER: But how does this resolve Les's
question of the real issue is mass market? Les.
MR. VADASZ: I think that reliability is very
important depending on the application. For example, today
electronic mail has become a mission critical application in
many of our corporations.
However, I think that we have time to evolve. I
think something like our telephone network is probably the
most reliable, most impressive reliability that I've ever
experienced in my whole company.
MR. WHITE: Accepted.
MR. VADASZ: We will get there. We need to get
there. But I don't think we have to be there today. I
think we have time to evolve as we deploy more and more
applications on the network. I think that where we have to
get very rapidly is broad band connection to the home. And,
yes, indeed there are many other issues to be solved, but
again, they will be solved incrementally. But I don't want
to lump that issue of broad band connectivity to the home
into just one of the issues that we have to solve along the
way, among the 100 issues. That is critical now, urgent,
and it's not happening.
MR. PEPPER: Stagg.
MR. NEWMAN: I just want to echo that. I believe
the competitive marketplace will solve a lot of the
problems. There are certainly major engineering problems in
the backbone connectivity performance, et cetera. And there
are going to be, there are lots of technologies available.
There will be even more. I think what's key is, one, we're
allowed to use all of those. We'll need wireless to get to
some homes. We'll need cable to get to some. We'll need
ADSL.
So you need to let all those deployment
technologies, all those technologies roll. LMDS, Local MDS
is one. It's 28 megahertz, wireless technology. My guys
weren't very enthusiastic about it. HP and TI are pretty
enthusiastic about it.
Finally, we observed, my guys are in New Jersey,
fairly foliage rich, rain intensive area. You know, TI's
out in Texas and HP's in San Jose. And the short form is
your enthusiasm for LMDS is inversely proportional to the
number of leaves you see when you look out the window.
So we need to allow all those technologies to be
deployed. But I agree with Les. The critical issue is the
mass market. That's where the tremendous cap X will have to
be spent. That's where you either have to dig up streets or
have access to spectrum. And frequently, it's not the
technology costs. It's the digging up the streets that
drives construction. And so I think that is the critical
issue that we need regulatory, economic, all of our best
thinking to solve.
MR. BERNENGER: Dan Bernenger from Vocal Tech. I
just wanted to add one other point to the reliability issue
in that this time around reliability is also an application
issue, that there's nothing I can do to my telephone to make
the telephone network more reliable. If you give me
unlimited band width and you tell me, well, I'll give you
ten meg, but I lose ten percent of my packets, I can do
things on the application level by sending multiple packets
out of the same quality or the same content and deal with it
at the other side.
So reliability is now also an application issue,
but it's kind of a tradeoff. If I'm paying a lot for each
of my packets, then I'm not going to put redundancy in there
and I'm not going to do various interpolation things or
whatever. So consider that as well. The applications has
contributions to the reliability.
MR. PEPPER: Thank you. Are there other
questions? If you could stand up and identify yourself.
And if you could raise your hand in the back so the
microphones can get to the next people.
MS. WOODARD: My name is Gwendolyn Woodard. I'm
President of Worldwide Education Consultants. The questions
are for Mr. Reed and Mr. Morgan. Mr. Reed, if I am a
subscriber and I subscribe to the cable network services
that you have to offer, if my lights go out, will I still
have access to your network?
MR. REED: The issue of whether you have emergency
powering typically the way the cable industry is approaching
that right now is for cable television services, there are a
number of our member companies -- there's no uniform
strategy, but a number of uniform companies do put in backup
power to handle that situation. Unfortunately, if your
lights go out, the television's out. So you can't really --
there's no reason. The same thing's true with the personal
computer. So there's not a lot of value in backing that
power up typically.
GWENDOLYN WOODARD: Okay. Mr. Morgan, you talk
about wireless technology. From my understanding, if you're
going to go from Point A to Point B and I send information
over the wireless technology, it's still going to have to
hit somebody's network before it gets to its destination,
whether it's wired or wireless.
MR. MORGAN: The technology that we deploy is for
your access to the backbone networks. So you're correct.
If you're going from one educational institution to another
that's five miles away, you'll use me as the access to get
onto the network and then you'll hop off at the other side.
Within a campus type environment or within a private network
environment, many people will use our technology right
within their campus.
If you don't want to tear up a campus or something
of that sort, they'll use it as a private network within
their school. But anything that goes off the network,
they'll use us to get off the network to a public network
somewhere.
GWENDOLYN WOODARD: Okay. And also from my
understanding, no matter what we do, we're going to still
have to use the wires or wireless capabilities of the LECs
and IXCs in order for you to get anywhere as far as the
Internet is concerned. You're still going to have to use
them.
MR. MORGAN: I guess it all depends on where you
take your definition there. We do have places where we'll
go from a school directly to an Internet service provider.
Obviously, the service provider is connected to the LECs and
to the PSTN somewhere.
MR. PEPPER: In the back.
MR. SCHMIDT: My name's Bob Schmidt. I'm with
National Digital Network and we have a PSTN test here today
that we would invite all of you to see. But my question is
really to Mr. Pepper and the people here on the panel from
the FCC.
Today we have to come to the Commission and play
mother may I to do what we are capable of doing from a
technology standpoint right now. And the people in the room
who are users and the gentleman, Mr. Morgan has a system up
and operating and I commend him. Because I think wireless
has flexibility to do some things. But we've got to get the
regulatory scheme caught up with the reality of the
marketplace.
And I think what Mr. Newman said about MMDS is
true. It is another wild card. But we want to be in the
game. And in order to be in the game, we need to have the
regulatory environment allow people like ourselves to bring
forth the capacity to deliver these services. So my
question is how soon will we have that, Mr. Pepper?
MR. PEPPER: Well, actually we can put this record
in that proceeding as well for the MMDS flexibility.
STEVE STEWART: Steve Stewart with IBM. Two
questions for Pat White. And I would like David Reed to
also answer the second question. And then if Stagg Newman
has any comments on that, that would be useful too. First
of all, Mr. White, you mentioned that Bell Atlantic is
investing about $2 billion a year in networks. Can you tell
us roughly what percentage of that is going to ADSL
investment or other broad band networks?
The second question is if you look at your ADSL
and other broad band technology deployment over the next
five years, can you give us a rough percentage of the number
of homes that would have to be available at the end of '97,
at the end of '98, et cetera. And then for David Reed, if
you could offer the same percentage deployment over the next
five years for cable modems. Thanks.
MR. WHITE: I don't have that data off the top of
my head, but I'll be glad to get back to you with it.
STEVE STEWART: Okay.
MR. PEPPER: Kevin Werbach wants to ask a
question. Kevin.
MR. WERBACH: Well, a little more than a year ago,
some of us remember the 1996 Telecom Act passed. And back
then everyone was talking about, gee, you are going to have
these big band width networks. Cable is going to provide
broad band to the home. Phone companies are going to
provide broad band to the home. It's all going to be
glorious. And here we are a year later and none of that
seems to be a reality for the mass market we're talking
about. What has held up that sort of development? Is that
just international exuberance? Or are we really going to
see those kind of developments taking place? Who wants to
take a stab at that?
MR. MORGAN: Wait until after the market closes.
MR. WERBACH: Pat, do you want to take a stab at
that first?
MR. WHITE: I guess I get all the tough ones, huh?
Well, I'd like to start commenting on that by going back to
a point I made before that there are a number of
uncertainties right now in the industry. We talked about
the fact of the technical uncertainty that exists. We do
know that a lot of the technologies we're planning to deploy
work well in lab environments. When you take those
equipments out into the field, you find a different thing, a
different situation altogether. So we have to make
adjustments for that.
On top of the technical uncertainties, there's the
new uncertainty with how the Telecommunications Act will be
implemented. The extent to which we have to price our new
technology below cost and make it available to people who
are not taking an investment risk that we're taking, you
know, leads to some caution that I think any prudent manager
would have to take into effect before making a bet.
But in spite of all of these things, Bell Atlantic
has been as I said before moving aggressively with upgrading
the local access. 98 percent of our central offices are
ISDN capable. And in addition to that, we ran trials I
think as far back as two or three years ago in ADSL at 1 1/2
megabits. And we are considering deploying the ADSL2
version which is the 6 megabyte version. And, of course,
our SDV trial in Dover is still going along.
So we are indeed proceeding with constructing
broad band capable networks that will do high speed data as
well as high speed video signals.
MR. WERBACH: Let me ask the same question of
David. A couple of years ago I think it was John Malone
from TCI was on the cover of Wired saying I think end of '95
cable will be providing broad band to homes. That obviously
hasn't really happened either, has it?
MR. REED: I'm not going to speak for John Malone,
but our -- it is happening. To be sure, there is a hype
factor, perhaps an over hype. But to the extent something's
new, that's a natural human reaction to things. You do have
commercial high speed data services, but Time Warner in
Akron, TCI in California, Cost in Phoenix and Comcast in
Baltimore. And these are real. These are actual
subscribers that are receiving this service. And we're
learning from those commercial deployments. They're not
technology trials. They are commercial deployments.
MR. MAXWELL: Can we help to scale this? When we
talk about 100 million access lines, it would be interesting
to say by the end of '97, what would you guess to be the
table modem penetration? By the end of '97, Pat, what would
you expect to be the ISDN penetration in Bell Atlantic
territory?
MR. REED: I'd like to -- to be honest, we don't
track that kind of information in terms of market forecast.
It's just simply not something we do. And so I can't answer
that. I mean, I can say that our member companies may have
very aggressive roll outs. To Bob's question earlier about
are there any regulatory implications to that roll out, we
think that the two-way cable high speed data services is a
nice service that roils out independent of the regulatory
environment since it's just a network Internet access
service.
Some of our member companies are looking at what
we call a telco return model which is because it takes time
to activate all your cable network, you would have high
speed access, high band width, in the downstream direction
and the telephone line in the return. In that case, the
extent to which anything that might impact how folks can
access that telephone line in return could potentially be a
barrier and that's a bridging strategy for the cable
industry until they can do that. So that could slow down
roll out if something like that were to occur.
But I don't think referring to TCI, they hit the
brakes on capital. I think it's a natural reevaluation
process. It's not that they're not going to do any of these
things. They're just reevaluating and figuring out how to
do it more efficiently. And they'll be going forward and
they are going forward. They have built a lot of state of
the art 750 megahertz plan. And so you will see these
services rolling out.
But, for example, with high speed data service,
it's associated -- it's not just the local access. You
know, they have at home which working on trying to work on
some of the other bottlenecks in the service.
MR. PEPPER: Do you have any idea what percentage
of the cable network today in terms of homes passed actually
have been upgraded to the 750 megahertz so that they would
at least be capable? Stagg's point we first have to do the
hybrid fiber coaxial upgrade before you're then ready to go
to the next step. Do you have any idea --
MR. REED: I mean, that percentage varies. I
don't have an industry number. I know for member companies,
it varies anywhere from 20 to 50, 60 percent.
MR. PEPPER: And Pat, a comparable question. What
percentage of lines or households could be provisioned with
an ADSL or XDSL without having to significantly upgrade the
networks other than just putting on the box in the home and
a box in the central office.
MR. WHITE: Yeah. I hate to answer questions like
that off the top of my head, but I think you're probably
talking 20 to 30 percent could probably be satisfied that
way. And the rest would require some fiber --
MR. PEPPER: So in some ways it's very comparable
to the cable industry situation which is basically that
someplace between 50 and 70 or 80 percent of households
would have to have their basic networks upgraded before you
could deploy the latest of the consumer technologies.
MR. WHITE: Right.
MR. PEPPER: The higher band widths.
MR. REED: Well, not necessarily. I'm saying with
the telco return model, for example, if that were to roll
out, that would be one example of having band width in the
downstream direction. But that's just, that's a bridging
strategy and the industry's learning right now about the two
way and how long it will take to roll it out and how rapidly
they can do it.
MR. PEPPER: Les and then Stagg.
MR. VADASZ: If I may, I'd like to rephrase that
question. I think it's a very good area to try to put some
meat on the bone. We all know the various technologies that
are applicable to this area. I'd like to understand our
collective judgment of when is the second million broad band
connection going to be installed in the home? I don't care
which way. I don't care if it's cable, wireless or ADS or
whatever. When are we going to have two million homes broad
band? My judgment is not in this decade.
MR. PEPPER: Stagg? Nobody's volunteering to
answer that. There's somebody in the audience volunteering.
Let's let Stagg ask first.
MR. WALDHUTER: I'd like to answer that. I'd like
to try to answer that question. I am Jeff Waldhuter, Pat
White's twin brother. I am Executive Director of Nynex
Science and Technology. We have done similar trials as Pat
has done at Bell Atlantic, both in ADSL and SDV technology.
What I want to say is that we've done a lot of similar
efforts and I think the other regions as well in '96. And
what we learned is basically the broad band capability, the
technology for the access piece is there.
So I'm in support of what Les said is that the
challenge to our industry as a whole is to move towards
broad band Internet and that's the whole challenge that we
have to embrace together.
What we found with the trials is the missing part
is now in moving to broad band Internet you're dealing with
much higher, higher speeds of traffic. And I guess one
point Les mentioned when will we have the first two million
lines? Well, I think we have the technology. We have it
both in cable. We have it in ADSL. We have it in SDV.
But the challenge we're trying to work out at
Nynex Science and Technology in '97 with our trials is to
come up with a scalable network solution that's cost
effective to the mass market. The public switch network
today as we know it was never designed to carry broad band
speeds, okay?
So we have to upgrade that, provide that overlay
network to carry this pack of traffic. And I don't think no
one telecommunication vendor, service provider, can come up
with the solution. We have to work together as a team to
build that. There are a lot of piece parts and no one has
all the answers to that. Thank you.
MR. PEPPER: So I think what I'm hearing is your
answer to Les's question is actually agreeing with Les that
you don't see as a practical matter the mass market, the
second million broad band home for at least, now we're
talking three, four years which is the end of the century.
JEFF WALDHUTER: I believe nothing has to be
invented in access technology to achieve that. I don't
believe anything has to be invented on the network side, but
what we have to do is come up with scalable solutions that
are easy to provision, easy to operate, easy to maintain.
And that truly doesn't exist today, either for the cable
industry or for the telco. The technologies are there. It
will take time to do that. I take all of the piece parts
are there. The CPE is there for the computer to support the
traffic and the applications of multimedia. The access is
there, whether it's ADSL for the telco or it's cable modems
or --
MR. PEPPER: Yes, I think we all understand that,
but the timing question I guess one of the questions is the
extent to which there are processes within the industry that
actually work those things out to move that out more
rapidly.
MR. WHITE: Let me take another angle at that. I
believe I might have said this before is that -- and the
point is you have to take a really total network solution.
Because even in my office today, and I'm sure this is
probably true here at the FCC, assuming you have a high
speed LAN connection in here. You don't see more than a
couple, I mean, two or three kilobits a second is what you
normally get when you download files from the Internet
today.
So you're looking at us to say, okay. We're going
to spend money to basically go out and fully upgrade, you
know, put two million customers on the Net by the end of the
decade. That sounds like sending a man to the moon somehow.
And yet, there's almost nothing that we could do, at least
within the immediate future, to make use of that band width.
I mean, the PCs are not there. The services are not there.
MR. PEPPER: And I guess, Pat, that leads to the
question for everybody here and maybe John wants to start
with this, which is what are the industry mechanisms to come
up with the kinds of systems that were described as
necessary that did not yet exist. How are all of these
various piece parts or components -- if we're talking about
the total network solution or the total network view, there
are lots of different pieces of this network, lots of
different industries competing. Sometimes your vendors and
suppliers, your competitors, what are the mechanisms to do
this? John.
MR. CURRAN: I'm going to pick up on that
question, but I'm first going to start by answering the two
million user question. I agree. I don't think we actually
have a technology here. BBN's participated in Internet over
cable activities in places where there's HRC plant is
already installed. This rolls out very quickly.
I have people in Boston telecommuting over this
and it's a very high band width solution. We've sat down as
have other backbone providers in the Internet to look at
what happens when you have, oh, fifty or sixty thousand
users coming in at T1 speeds. And certainly there are some
issues there, but they're not necessarily technology issues.
The main thing I see is that there are real costs
associated here. Don't under estimate the costs that are
incurred in a broad band solution to the home and dismiss it
as something that technology will necessarily just wash
away. That isn't the case. The main issue I see limiting
deployment of two million users is two million broad band
buyers. Once they appear, I don't see any other problems.
MR. PEPPER: Okay. We have a request from the
Reporter that people who speak from the floor if you could
just provide her with your business cards so we can spell
your name correctly. If you do not have a business card,
spell your name when you speak. Because again, this is
going into the official record. We have somebody over here
with a mike.
MR. MAZER: John Mazer, General Datacom. Open
question for the board. It sounds like what we're all
searching for is a driver to break the broad band bottleneck
that we keep speaking of. Is it possible to tie in the levy
of ISP telephone access charges to the availability of a
broad band local loop capability by any service provider?
MR. PEPPER: Anybody? I think they may -- is it
correct to interpret your question as a charge associated
with broad band to pay for broad band? Is that what you're
suggesting?
JOHN MAZER: Sorry, it's the charging of an ISP as
a carrier to access the telephone network which has been
proposed by the local exchange companies.
MR. MAXWELL: Subject to there being a broad band
deployment by the local exchange company.
JOHN MAZER: Or any of the service providers in
our newly deregulated environment.
MR. JACOBSON: May I respond? My name is Gordon
Jacobson. My company is IRAP Network. We have a broad band
Internet access network running up and down the East Coast
and our sister company in California who has a
representative here who would be on one of the panels this
afternoon. We'll be talking about the subject of broad band
network. The question really is broad band access. It's
not about the existence of a broad band network. That
technology is already here and it's scalable. The question
of the access fee should be separate and distinct from
anything else. That should be unrelated.
I have a question that I'd like to address to John
Curran if I may. John, when we see telcos talk about the
Internet and when Pat talks about the Internet, one presumes
that from what they're saying one can infer that they think
the network is all about dial up access. I'd like to hear
your comments about the percentage of users who do not use
dial up access.
MR. CURRAN: It's a good question actually. The
fact of the matter is that we think of the Internet and
people think of the most common pieces that they interface
with, the large online service providers, the dial up
service you use to get into your school or work.
A vast majority of the Internet traffic is coming
directly from those local area networks in businesses. It's
coming between very large servers. People who are at work
using it for work, people who are busy engaging in as I said
transacting business over the network.
We're seeing many activities that used to be done
entirely on paper now being done online. You see not just
retail catalogs on line, but wholesale catalogs on line.
You see people removing their software distribution
infrastructure because the Internet is there. Why not use
it for software distribution?
Companies are reducing their call centers because
they're handling the support online with interactive media.
So, for example, BBN's focus is entirely business. We serve
approximately 3,000 business customers which include the
high technology who's who and many of the people who are
online service providers. There is two distinct markets
here.
The fact of the matter is that when we talk about
the network, sure, there are technology hurdles, but the
Internet providers have increasingly been working to make
sure that we can scale the Internet traffic, the backbone to
handle the traffic needs. The access network and the issue
of how access charges are reformed over time, whether or not
that's going to encourage broad band access, et cetera, is
very much a distinct question.
And I just need to point out that the question of
how people get access to the network given the wide range of
technologies that we've seen, the most important thing is
just to make sure that all of them are available on a basis
that recovers their costs and shows a profit and that there
is no artificial restraints or pricing involved that will
skew the market decision of 3,000 ISP buyers out there.
MR. PEPPER: Les.
MR. VADASZ: I'd just like to add something to
this. I think that we see a very healthy competitive market
competing for the dollars of corporations for Internet
access, Internet service. I think where we see a lack of
competitive environment is the residential broad band area
where there are no real technology deployment of any large
scale level.
MR. PEPPER: Thank you. Oh, we have time for one
more question. Alan.
MR. CIAMPORCERO: Alan Ciamporcero. It's an easy
name to spell. You shouldn't have trouble with that.
Kevin, I've just got to say something about your question.
I'll go absolutely crazy if I hear another person from the
Commission say why aren't you in the video business?
We spent, as a lot of people here know, two years
trying to get video dial tone applications passed and get
through that process. By the time I got through with it,
the business unit had literally fallen apart.
Now, if that were only of historical interest, I
wouldn't bother bringing it up. But we may be facing the
same thing with ADSL. Lee Bauman's going to talk about that
later.
The Commission needs to have policies that
encourage investment, not that discourage investment. And
we believe that the interconnection policies are doing what
the video dial tone policies did a couple of years ago,
making it take so long for us to get into a new business
that we can't rationally plan from beginning to end.
Thanks.
MR. PEPPER: Thanks for the statement. Is there
one last question?
MR. ROSS: Thank you very kindly, Mr. Pepper.
MR. PEPPER: Yeah, just talk.
MR. ROSS: My name's Charles Ross. I'm President
of the Canthos Corporation, BNET. One technology that was
not discussed here this morning which we're using in
expensive Internet satellite provision by taking capacity
overseas to international telcos in developing countries and
ISPs is streaming data compression. This is a new
technology. It does work. And it allows us to bring bulk
capacity from the North America and European grids directly
into ISPs who are obviously looking to lower their cost of
service provision so they can create what I like to call
locally affordable services. If the local people can't
afford it, they're not going to use it.
My question to the panel is being that this
technology is new but exists today and I say with respect it
is largely based on Intel chip technology, we would like to
see the opportunity in the domestic U.S. market to see this
deployed. It is a board level technology which can allow
users to avoid the choke points of difficult local access.
And while this does seem like a new technology, it exists
today. It is stable and we are deploying international
satellite circuits across Intelsat and other systems to use
this. Thank you.
MR. PEPPER: Does anybody on the panel want to
respond to that? Thank you. I want to just come back --
we're going to take a quick break between panels, but I want
to first just comment on something that Stagg started off
with and that is that business and large business customers
have access. They're getting broad band access. We've
heard that this morning. The question really in our minds
is precisely the one that Les asked which is the mass
market, the residential consumer, the small business
consumer. And this is really at the heart of why we are
having the forum. And I think unfortunately this is not
going to be the last forum. In fact, I suspect we'll have
many more before we hit the first million residential broad
band consumers. I want to thank the panel very, very much.
This has been a great discussion this morning. We will
reconvene by that clock at exactly 11:30. And so we have a
ten minute break. And if the new second panel can come up
in the interim, I'd appreciate it.
(Whereupon, a break was taken.)
MR. PEPPER: We promised we would start again at
11:30. We are close to that by that clock. Kevin Werbach,
our counsel for new technologies in the Office of Plans and
Policy, is going to introduce the panelists for the next
panel and take over some of the moderating responsibilities
for this panel. Kevin.
MR. WERBACH: Well, we've had one session looking
at some of the different ways of delivering band width. In
the second panel, we wanted to focus more specifically on
one underlying network which is the public switch telephone
network as a starting point and then to move out from there.
It's clear that today the public switch telephone network is
the primary way most people get to the Internet.
But at the same time if you open up the papers or
magazines over the last several months, there have been
front page articles about congestion in terms of the growth
in Internet use and the implications that that might have
for the network and also issues about congestion on the
Internet itself as the Chairman remarked, people getting
busy signals, trying to get onto America Online.
So we brought together some people on this panel
to look at some of those issues, both in terms of overcoming
the limitations of congestion and getting on the Internet
and also going forward how the public switch network,
telephone network can be optimized for delivering data.
We also have a new addition to our moderators'
table, Jane Jackson from the Common Carrier Bureau at the
FCC. Jane's been very involved in managing the access
reform proceeding that people had mentioned earlier and
looking at some of these issues from our perspective. So
we're glad to have Jane here to join us.
On the panel we have first Lee Bauman who's Vice
President of local competition for Pacific Bell. Pacific
Bell probably has the most busiest part of the Internet
right in its backyard. So if there's anyone who is familiar
with the challenges of accommodating the Internet and public
switch network, it should be Lee. So we're interested in
what he has to say.
Next we have Mike Trest from ATMnet which is
Internet network provider that's pushing the envelope of
performance through networks and obviously that raises the
question as someone mentioned on the previous panel all the
bandwidth in the world that you can have in the Internet
getting to it through the phone network.
Third, we have David LaPier from Cisco. David is
a solutions consultant from Cisco who's been looking at some
of these issues in terms of congestion on the phone network.
Cisco being the provider of much of the router technology
that's used throughout the Internet, obviously has dealt
with these kinds of challenges of filling up the Internet as
the Internet. So the next challenge I think is to figure
out how to optimize the telephone network in the same kind
of way.
Jamie Love from Consumer Project On Technology.
Jamie has been very active in looking at the issue that
everyone was talking about the last time which is how do we
get out to those 100 million households with these
technologies and what are some of the issues with services
like ISDN in particular that are there now?
And finally, we have Matt Korn from America On
Line and Matt is the Vice President of Network Operations.
If there's anyone who's more familiar with the challenge of
overcoming congestion limitations and delivering band width,
Matt's probably the one.
So we've got a good group of people here. So
we'll start once again with a two or three minute opening
statement and I'm sure we'll have a lively debate like we
had the first time. So Lee, I'd ask you to go first.
MR. BAUMAN: Thank you, very much, Kevin. Pacific
Bell is both a large local exchange carrier and a large
Internet access provider. And both businesses are very
important for our future. Today as I talk about regulation
and pricing, I would ask you to keep the following scenario
in mind. If you were given a choice of continuing to keep a
service which you're using essentially for free as compared
to a service which is better, faster and more efficient, but
for which you need to pay more, which would you choose?
This is the dilemma that we face given the current
ESP access charge exemption. The problem is made worse by
the below cost pricing of our basic exchange access services
in California. Our customers in California, both end users
and ESPs, don't pay per minute of use for Internet access.
And even the California Public Utilities Commission has
agreed that line prices are set at about one half their
cost.
While some of have thought that the ESP exemption
was an appropriate policy approach to encourage the growth
of an infant industry, it has now become a critical
roadblock to the development of new, more efficient products
for the growing Internet market. ESPs, including Internet
access providers, have responded to these false pricing
signals created by the ESP exemption by using the switch
access network in an efficient manner. And to no one's
surprise, the end users have responded in the same manner.
Now, per minute of use access charges are not the
only alternative. But prices that cover cost must be a part
of any reasonable solution. Our technologists and product
development folks are working hard to come up with
alternative arrangements that are acceptable to customers in
terms of speed, flexibility and price.
We have ISDN available and very aggressively
priced. We have announced the roll out of ADSL. We have
designed alternative network configurations that can
eliminate the current problems ESPs have with modem poles
and network node configuration and give customers better
service. Technology is not the limiting factor. You can
imagine the tough time we're having given the scenario I
asked you to keep in mind a moment ago.
While we have faster and better alternatives, from
a pricing standpoint we can't compete with something that
customers and competitors are using and having almost for
free. If we extend the current regulation into the new
environment, we will discourage investment and innovation
because there will be no competition on a facilities basis.
Let me explain why. First, competitors will not
invest where they cannot make a reasonable return. New
entrants will not enter markets on a facilities basis if
prices of the incumbent's services are below cost.
Second, regulation will keep some prices
artificially low while competition will drive certain other
prices down. The company caught in this imbalance is in
jeopardy and certainly has reduced incentives to invest in
this network.
And third, regulation requires the incumbent to
unbundle their networks beyond what we think is essential
and to price unbundled network elements at cost. Given
these conditions, there is no incentive for competitors to
invest in their own facilities because every customer is
financially crafted to serve with minimal or no investment
required.
So the important question is what can we do to
encourage investment and innovation by all competitors?
First, we should let the market decide whether the new
environment is to be a one, two, three or more wire or a
wireless world. Today regulation seems to assume that the
information highway depends on a one wire world and the full
force of regulation is being brought to bear on that single
wire.
Second, we should resolve existing price cost
distortions in ways that encourage investment by all
competitors.
And finally, we should allow the market to
determine the winners and the losers. Let us build a world
on the assumption of competition, rather than a one wire
world that assumes no competition. Thank you.
MR. PEPPER: Thanks, Lee. Mike.
MR. TREST: ATM Net is a relatively new in the
market. But in the year and a half of our existence, we
have already established a new quality of standard by taking
advantage of those new synchronous transfer mode
technologies. We provide direct access to our business,
large and small business customers, at a 155 megabyte.
That's about 100 times larger than the access provided by
most Internet suppliers at 1 1/2 megabits.
And for those of you at home, it's still 7,000
times faster than you can get on any modem technology. And
it's about 40 times faster than the cable modem plants that
are in place today. So it's this rather niche market that
I'm in.
However, we need to narrow our focus on this panel
to look a bit at today's technology and the reported PSTN
congestion. The ISPs, their dial up customers, our business
customers, have spent billions of dollars in investments.
We are making the likes of our esteemed colleagues at Cisco
and others billion dollar companies in revenues every year
by our purchases. So unlike our telcos who are extremely
large and noticeable in their investment, we also have made
no similar investments.
Our concerns about the LECs movement into the
Internet service provider business, especially in California
where I am located is real. We need to address that concern
because years of regulatory protection have provided these
LECs with economic powers which could be inappropriately
used to restrain non-telco related ISPs. I have examples
that we'll probably hear later about why we worry about
congestion and yet Pacific Bell in my market can send a
mailing to every telephone subscriber in the state and offer
them six months of free Internet dial up access.
Well, let's move to some specifics. There are
today's technology that can indeed eliminate some of the
problems.
Number one, we can rebalance our exchange hot
spots. Now, this is rather technical. So I'm going to get
rather precise on it. Our switch congestion in exchanges,
especially where there are concentrations of ISPs can be
remedied today by some minor encouragements from both the
Commission and the business practices of the LECs.
In such simple things as market area dial up
plans, area wide prefix coverage or reduced charges for
remote exchange back haul can be resolved today by actions
of the Commission's in general, the PUCs and the LECs.
However, these kinds of discussions with the local LEC
usually fall apart over tariff costs, alleged regulatory
constraints or simple inertia on the part of the LECs.
Two, we should all look towards using alternative
dial tone and switch server providers. The historic LECs
now have competition. MFS and TCG, for example, in our
markets provide additional switching capacity in many of the
major markets. If the historic LEC is not able to keep path
with switch congestion, then the ISPs generally should move
to these alternative vendors and eliminate much of the
alleged congestion.
Three, we should encourage movement away from
switch facilities to even today's limited PS1, 1 1/1
megabyte facilities and thereby move hundreds of thousands
of businesses, large and small, who are today using ISDN
dial services. The cost differential for the consumer for
the premises equipment of 128 kilobit ISDN and 1 1/2
megabyte DS1 lease line service is only $1,000 one time
expenditure. It is my contention that business communities,
large and small, would gladly pay that differential to
remove themselves from the switch congestion environment.
Now, if the LECs were encouraged by regulation and
market pressure to work with the ISPs a little better on the
DS1 price adjustments. We should be able to do this and it
would be economically interesting to both the LECs and the
ISP community generally.
Fourth and final. We should improve the ISP's
regional and local cooperation with the local LECs in the
technology issues. ISPs and LECs should be working together
to better utilize the existing infrastructure, not just the
switch path infrastructure, but also all other
infrastructure types.
If, for example, ISPs had the unbundled access to
all aspects of current loop environments which we would be
willing to pay for it, whatever the cost, we believe that
the ISPs will lead the LECs in the deployment of these new
technologies because we are not encumbered with the 20 and
30 year bond debt cycles and the IRS regulations that forces
them to amortize copper over many years.
In the absence of greater cooperation between the
ISP and the LECs, it should not surprise anyone in this room
today that the ISPs and the public equity markets will shift
their investments to non-telco related infrastructure
projects. Thank you. [applause]
MR. PEPPER: Thanks, Mike. David.
MR. LaPIER: At Cisco, John Chambers, our
Chairman, is always reminding us that our industry is moving
at Internet time and a chronological year of one year is
seven years of Internet time and the various implications of
this, and I think some of the remarks we just heard relate
to that. I keep wondering whether I'm going to die younger
or live younger. And maybe as a corollary we should ask if
the public switch telephone network is going to do the same?
Is there pressure on the local exchange and the
public switch network caused by dial access? Clearly, there
is and the modem is not going to go away. It's here. We
heard from the last panel that that's definitely the case.
So we've got this public switch network
infrastructure to deal with and there's a need, I mean, it's
optimized fundamentally for a different application. It's
optimized for voice where with systems that are 8 to 10
percent occupied as opposed to now reaching 70 percent
occupancy in some places.
So there is a problem and there are technical
solutions clearly. And the local exchange companies and
their competitors, CAPs, et cetera, other telephone
companies that are seeking to compete with the local
exchange, utilities, are going to seek out alternatives,
together with the LECs and how they're going to be making
those investments. They can make technological investments
in the embedded switch infrastructure. There are new ideas
coming out from vendors every month about putting new kinds
of switch capabilities into the network that can encourage
new services.
One interesting capability which would in a sense
create an overlay network in the local environment is a dial
up virtual private network services where access servers,
modems and ISDNs are effectively provided on an out source
basis. You move the modems closer to the subscriber. The
dial component of the call ends and hence the switch, the
inefficient use of the switching systems end earlier and
traffic moves onto the packet switch networks sooner.
Beyond the modem, the packet switch network can
carry that traffic to enterprises and Internet service
providers in a much more efficient manner with 10 to 1 or
20 to 1 improvement in band width.
So this is one example of a more efficient
solution that companies that are interested in competing
with a local exchange are looking closely at.
But there's another dimension to a more efficient
solution and that is the nature of interconnect
arrangements. Even separate from price issues related to
terms and conditions. Planning and engineering information
being shared in a more effective manner. Measurements of
networks being shared on both sides in the more effective
manner. Order processing and customer care being provided
in a better way.
And in the current telephony world of large
interchange carriers and large local exchange carriers were
able to work out these agreements. Now we have this
tremendous challenge because, number one, we have many,
many, many more stakeholders, especially the small and
regional Internet service providers who are bringing
tremendous value to this business and bringing services to
customers. So it will be more difficult. And, of course,
also because the rate of growth places a challenge on the
establishment of interconnection agreements.
So the last point I'd like to make is in respect
to the future. Computing power is not going to slow down
just because the telecommunications industry wants it to
slow down. Those remarks that were quoted earlier by Andy
Grove and from Microsoft, that's definitely a fact that's
going to be here very soon. Plus, we're going to have
Internet appliances that will widen the framework as well.
Several years ago we heard in rooms like this discussions of
come onto the Internet and build your log cabin in the
Internet marketplace. Well, clearly now we have main street
on the information marketplace. So we have to meet those
challenges. Thank you. [applause]
MR. PEPPER: Thanks. James.
MR. LOVE: Thank you. I assume this thing about
the three minutes for opening statements is really kind of
an urban myth.
MR. WERBACH: We can ask. Virtual three minutes.
MR. LOVE: I brought an ad with me that was
referred to earlier about Pac Bell saying order a second
telephone line for $11.25 a month and we'll give you, this
one says five months of free Internet access with Pacific
Bell Internet.
Now, aside from asking the FCC to request the
Justice Department to investigate predatory practices by
Pac Bell which I think is overdue in this particular case
[applause]
MR. WERBACH: Can we ask the audience not to
applaud during the question? I know people have strong
views about all of this, but we want to give everyone a
chance to speak and be respected.
MR. LOVE: You have the obvious hypocrisy of Pac
Bell complaining about Internet use bringing the network
down and then saying if you order a second telephone line
for eleven bucks then you can have free Internet access for
five months. So they're giving away a competitive service
for free if you order regulated service for eleven bucks.
They claim it's priced at half of what it actually costs
them to deliver the service.
So one has to be a little suspicious of what a monopoly
can get away with in this world.
Now, I'd like to talk a little bit about this
thing about congestion which I think is a product of a very
big multimillion dollar propaganda campaign by local
exchange companies about the way the Internet's used by dial
in users.
We've done surveys of Internet service providers
and almost none of them have fewer than ten customers per
incoming line to provide service. And a lot of them have
about 20 customers per incoming line. America On Line had a
lot more than 20 customers per incoming line. They had
about, they had incoming lines for maybe three percent,
maybe three percent of their customers. And now they're
going to try and ramp it up with a big $350 million
investment so that they'll have five percent of their,
they'll be able to serve five percent of their customers at
one time.
Now, if you dial in America On Line and you're not
getting an answer, that's because they haven't really got up
to sort of the industry standards. But the fact of the
matter is ISPs, Internet Service Providers, typically
provide access for 5 to 10 percent of their customers at any
one given time and that is a hard and fast constraint.
That's not a fuzzy, squiggly constraint. That's not a
constraint you can ignore at 3:00 o'clock in the afternoon
because you sort of changed your mind. There are only so
many incoming lines.
So if only five or ten percent of the people that
call up, dial in users, can get connected at any one time,
how can it cause this big congestion on the public switch
network? Bell Atlantic says the residential network is
provision for one in seven customers can connect at any one
time. That means if you're one in 20, you're way below one
in seven. That means that if you're one of the best
Internet service providers and you're one in ten, you're
still way below.
Well, people that dial in as residential users,
they mathematically -- it's impossible they are not causing
any extra to be added on the system than people that use it
for normal voice processes.
What is happening? Well, the telephone is busy
frequently at the Internet service provider. Their number
is sort of tied up a lot and that is because the ISPs do
what any smart business would do is they order the right
number of lines to service their customers with any given
level of service. Just like Bell Atlantic doesn't provision
one to one for the residential market. They provision one
to seven because they think that's enough lines or enough
circuits or enough interoffice trunkage to serve the people
that use the telephone.
ISPs do that. I work in an office. We have a
PBX. We don't have as many incoming lines as we have people
in the office and we ordered the number of incoming lines to
roughly correspond with what we think we're going to need at
3:00 o'clock in the afternoon.
So I would start out with the fact that all this
crap about congestion has really been unexamined by people
and I would really urge people to try and pull out the old
calculator and do a little bit of arithmetic in terms of the
way the Internet's currently being used and look at some of
the data.
The issue about length of calls is really
ridiculous. The fact whether you make a call for five
minutes or an hour at a time doesn't really make any
difference. What makes a really important difference are
the number of minutes you call in the market, the number of
setup charges and things like that. People do not make as
many calls to ISPs as they make voice calls. They make
longer calls to ISPs. They make more frequent calls to
voice things.
There's been something left out of the arithmetic
if you only look at the length of the call. You have to
look at the total number of calls. You have to look at the
length of the peak or the Internet service providers are
lengthening the peak from what the peak was before and stuff
like that.
So I think that the congestion thing for people
dialing in ISPs is really way overblown. However,
ultimately you do want to move away from a circuit network.
You want to move to some kind of a packet type network in
the long run because ultimately the goal should be everyone
should be connected all the time. I mean, that's really
what I think the ultimate goal is. So you've got the short
term reality and then you've got the long term thing where
you want to go.
Now, we've heard this morning in the previous
panel that virtually none of the big high tech pie in the
sky things are going to happen right away. When we talk to
companies like Bell Atlantic, they tell us it will be seven
years before they anticipate any kind of meaningful
penetration of ADSL as a consumer service into the home.
And I think that people in the cable business are beginning
to kind of come to grips with reality over there in terms of
the wiring of the cable network.
So what are we really stuck with in the short
term? Well, you probably can do ISDNing of the home. Is
ISDN bad? What can you do on ISDN? You can do video. You
can do high quality audio. You can bond together ISDN
lines. You can do really a lot with ISDN.
So why is ISDN never talked about in forums or
anything else? It's because the LECs control it. They're
pricing it through the roof and they're sending a signal to
consumers, don't buy ISDN configurations. Don't wire your
house for ISDN. There's no future. We will not let you buy
it no matter what you do. If you order it, we won't deliver
it. We won't promote it. We'll charge all kinds of bizarre
fees on things like extra numbers for devices and spuds and
all that kind of stuff. So their heart isn't in it. And so
people read the writing on the wall and they say, okay.
Let's sit around and hope technology can rescue us from this
low band width technology sort of nightmare that we're in
right now.
Now, there are states where commissions have done
and they've come in and they've whacked the rates quite a
bit from what the companies ask, but it's uneven. Because
not all commissions are sophisticated. They're not
motivated. They don't really know what to do.
I will tell you that by and large the LECs coming
in, and you saw it in the recent proposed rulemaking.
They're saying that they're not traffic sensitive cost for
ISDN are roughly about five bucks over what they are for
POTS service. That's kind of the numbers they submitted,
you know, that was presented in one of these tables for
notice of performing rulemaking, unbundling and stuff.
And then they say their direct cost of usage are
roughly in the neighborhood of ten cents per hour, not per
minute, but per hour. That's roughly the numbers they come
in with. But they ask for fees, really high fees. So the
pricing's way out of whack on ISDN.
There are some exceptions. Ameritech's done some
good things because maybe they didn't want to, but they did
it and a few other places. But one of my favorite examples
is in Arkansas where Steve Sanders, who's a Ph.D. in physics
and an MIT degree in engineering, runs a phone company down
there. They have non-blocking switches. Everybody in the
whole area can connect at the same time. They provide ISDN
for $17.90 a month and it's flat rated. Plus, they throw in
free Internet access just to sort of move the ISDN service
into the market.
He says that ISDN for the vast majority of people
in rural America and people outside of areas, the only thing
they're going to have for a really, really long time. So I
think regulars can focus on the tiny minuscule number of
people they're going to have the sort of space age
technologies in the short run or the 95 percent of Americans
that could have 128K in the short run in digital connection.
And you can decide where to put your priorities.
MR. WERBACH: We're going to need to --
MR. LOVE: Wrap it up?
MR. WERBACH: Move on.
MR. LOVE: Sorry. Now, in terms of, last page of
our prepared comments, we pointed to some strategies that we
think regulators can do. Several things. One thing we
need, I think you need to do is to sort of provide market
based economic incentives for companies to point any kind of
a digital technology. We don't really care what it is. And
what we recommend is you look at the penetration rate at
Bell Atlantic and Nynex and all these guys and have them
compete against each other. And you say the ones that have
the highest penetration rate relative to the other guys, in
other words it's a sort of invidious comparison, they pay a
different rate of the universal service fund. So there's an
economic cost of not deploying. There's an economic benefit
of deploying. And then all of a sudden, we think attitudes
will change.
So that's our principal we think motivator that
the Commission should follow. And we also think they should
provide incentives and things to sort of move people off of
the circuit thing into some of the new -- picking things up
at the switch. We know in Japan they ask people that want
flat rate service to register phone numbers if they call
numbers. That may be a a useful thing in taking data off
the switch before it gets into the circuit. We've talked to
some of the guys about it. I know my time's up. Thank you,
very much. [applause]
MR. WERBACH: Matt.
MR. KORN: Thanks. In deference to my colleagues
from the local exchange carrier, I'll try to keep my
comments to three minutes. I understand three minute hold
times are kind of preferential in this area.
I'm Matt Korn from America On Line. And, of
course, we're in the headlines almost every day because of
just how rapidly this industry is growing. I joined America
On Line four years ago back when we had only a couple of
hundred thousand subscribers and 2,000 folks could get onto
the network at one time. So it was a modem ratio Jim was
talking about. It was actually 1 to 100 back four years
ago. We had an excess of modems at the time.
Really what's happened is we've seen an explosion
in interest in the Internet. Just as the American On Lines
ads on TV say, the future is here now. It's a good reason
why the music is set to the Jetsons because the future
really is here and it's arriving as we sit here and speak.
The change in member to modem ratios is really
phenomenal. It was a year ago it was a 1 to 50 ratio and it
was a 1 to 30 at the beginning of the summer, I guess the
end of the summer. There was a huge interest in the
Internet over the summer. Probably almost everyone in the
room here listened to ads on the TV during the Olympics and
just every single one of them was followed up with a web
URL.
And so we have this explosion of interest and so
the modem ratio is now approaching 1 to 25 and we're on our
way to 1 to 20 over the next six months. So the Internet is
indeed we'll all look back to 1996 and say this is really
the time when it came to the public in America in a massive
way, in a way that it hadn't in the past.
I should also for those of you who are subscribers
and members, we're working really hard with our colleagues,
local exchange carriers, who in general are working very
closely with us to deploy additional modems in the field.
We rely heavily on their technology and circuits in the
various communities around the country to get our modems
deployed.
So we're working hard and we'll have the extra
$350 million worth of modems and server technology installed
between now and June. That is my priority. And if you hear
a pager go off in the room, it's actually probably someone
else's because I think mine doesn't actually beep. It's one
that goes --
There is a lot of confusion about the different
kinds of congestion on the Internet and I've heard some of
it in the discussion today. The busy signals that American
On Line customers have been talking about really are busy
signals for the most part of we're out of modems in the
various cities. We've got 200,000 modems in our own network
today and during peak hours. The vast, vast majority of
those modems are all busied out.
My colleague from BBN, John Curran, is here and
they're a very strong partner of American On Line along with
Sprint and the Advanced Network Service Company, ANS, in
deploying these modems. And they know exactly where the
busy signals are and they're out there provisioning circuits
and installing modems.
It's not busy signals for the most part that
relate to members. If you're not trying to dial American On
Line, it's not a problem and concern. So we're not looking
here at an impending melt down of the public switch
telephone network as a result of American On Line users.
What we're looking at here is an awful lot of congestion,
not dissimilar to the cue we all experienced in the men's
room trying to all go to the bathroom at the same time
during the break.
So, and just as in that case the solution would be
to install more, that's exactly what we're out there doing.
I know this isn't the most glamorous metaphor, but it
actually, it is sort of what's going on if you look at cuing
theory.
We should point out that congestion in the
Internet is also a major concern for American On Line and we
work closely with our colleagues in the Internet backbone
business in a number of different areas, particularly we've
been working real hard over the last few months to try to
bring in more circuits from more different Internet
backbones directly into American On Line's facilities so
that we can cause the transfer of data between one backbone
and the other to occur on our premises as opposed to being
out at the Internet maps. So we think that's one step we
can take in order to both improve performance for our
members and improve the overall backbone of the Internet.
We've invested several hundred million dollars in
technology to make local copies of very popular web pages at
AOL. So that in general most of the time when you go out to
the web if somebody else has been there before, then it's
cached locally.
I don't know that WWW.FCC. -- I don't know your
full logo, I don't know if that is on the most popular list.
But you had mentioned earlier that you'd be putting some of
the presentation materials out there on the -- out there.
And indeed, some of the overhead viewgraphs earlier. And
you'll notice that when those are transmitted down to you,
not only will it go in faster like my colleague was showing
you a demonstration of mission at 28.8.
If you go and access it from our technology, we
spent a lot on compression technology as well. So that the
images are compressed, then transmitted down to the members
and then decompressed. So that in fact it makes the
experience of using the Internet at lower speeds. And I
should mention that still the majority of American On Line
members today are accessing the Internet at speeds of 14.4
or below. We spent a lot of time talking in this room
earlier today about high speed technologies. But consumers
in America area really still on lower technology speeds.
They're at 28.8.
The corollary to this is the importance of noting
that consumers will upgrade to higher technologies and
higher speed services when the incentive is there and the
price is right. So we've seen our members upgrade to 24
baud modems and 14.4 into 28.8 and we'll be upgrading our
backbone and modem technology in the majority of our own
networks to support the new X2 technologies. So consumers
will be able to provided that the quality of the telephone
switches in between their homes and our modems is high
enough. They'll be able to get connected speeds up to 56K.
And I should mention that that's just an example
of American On Line making an investment in our technologies
prospectively in order to capture more consumers. And I
think it's a model that maybe all of us around the table
here ought to be thinking about in terms of how we ought to
invest in our business in order to grow it.
Finally, I did want to point out that though by
and large we are working real closely with the Bell
Operating companies and expanding the network, there are
some limited cases and some of these have made the press in
recent days of places where there are some engineering. I
would really call it inadvertent engineering mistakes in the
public switch telephone network which do prevent AOL members
from getting onto our service.
And generally, this is a misprovisioning between
some central offices and it's generally very easy to fix.
It's really a low level engineering problem. It's not one
which is very expensive to fix. But we work closely with
the operating companies to predict trafficking patterns.
We're willing to work even closer. But it is important for
the Commission to realize that we are highly dependent on
these guys to bring high quality access to our consumers.
Because ultimately if there are problems, it's really the
consumers that are going to suffer here. And so we ask that
you help us in that area. And I think I'll end my comments
right there for now. [applause]
MR. WERBACH: First, I'd like to give Lee a chance
to respond to Jamie. Is there really a congestion problem
because of Internet usage and if so how does that happen?
MR. BAUMAN: Before I even respond to that, let me
just say I opened my remarks by noting that Pacific Bell is
a large LEC and a large Internet access provider and that
both businesses are important to our future.
And we know that Internet access is a competitive
business and we're committed to that. In order to be
successful in a competitive business, we need to utilize all
of the methodology that competitive businesses use. The
fact that we proceed to move into that business aggressively
therefore in fact contribute to the issues in our core
network the same as AOL does, does not mean that therefore
they are not issues and that any hypocrisy is involved.
It was interesting that James even noted that
after he criticized Pacific's early entry plan, one of the
ads when we were first getting into the business, he noted
that another company I think in Florida was giving away
Internet access for free and he praised that as a good
competitive tool.
So it's important to note that when competitors
criticize an organization for certain approaches, it may be
competitive issue rather than something else. And Pacific
Bell will continue to be a strong competitor in the Internet
access business.
Now, on the network congestion issue, I was
frankly surprised to learn here that traffic on the network
doesn't have anything to do with congestion. Maybe I
misheard that, but that seems to be what it said. In our
measurements, well, there's about a million active Internet
users in California. So it truly is the focus of Internet
activity for the country right now, leading the country.
So there's a million. And for those million
active residents, customers primarily I'm talking about,
their average use per day of originating calls for Internet
is 62 minutes a day. So 62 minutes originating traffic to
the Internet, not counting their other traffic. Now, our
average residence customer originate about 22 minutes a day
of traffic. So that's the average, 22 minutes for all the
calls of the average residence customer. So we're seeing
that an average active Internet customer uses three times
the number of minutes as does the average residence
customer.
We last year had 23 billion minutes of use going
to Internet access providers in California. So 23 billion
minutes. It's clear that that much traffic has to do
something in using up ports and trunks in our network. Any
analysis will show that to be true.
We estimate that in 1997 we will spend
$130 million in adding additional ports and trunks Internet
work to handle the increased Internet access traffic. In the
next three years if the pricing rules of the regulation do
not change and we continue with the current infrastructure,
the current pricing structures, we will estimate that we
will spend $600 million in investment in these capabilities.
Now, we believe that a good portion of that money
could be much better spent for the benefit of the country in
building the new forms of data networks that you heard
talked about this morning. We think that rather than
spending that $600 million and augmenting the current
circuit switch network and perhaps later being surplus
capacity when we in fact do get the fundamental pricing
structure changed and people then start using overlay
networks.
Rather than spend that $600 and we've heard AOL is
spending huge amounts of money, I think nationwide they're
saying $350 million spent in the near future, which wouldn't
be needed if we invested in the appropriate overlay data
networks that the focus here needs to be on improving
incentives to make the investment targeted towards what's
efficient and effective for customers rather than the
current structure that everyone agrees is not best. So,
yes, there certainly is a capacity issue. But we're not
saying our network is falling apart. We're spending the
money, a lot of money, to continue to provide high quality
service.
MR. WERBACH: Well, Matt, could you follow up on
that? We talked about all the modems that AOL is putting in
and putting in more to respond to congestion. But isn't
that sort of locking you into this circuit technology that
everyone here has said is inefficient?
MR. KORN: Well, we can divide that $350 million
that we've been talking about into a couple of categories.
I would tell you that approximately half, maybe slightly
less than that, is actually in the modem technology base and
the other half of that is in server technology at the host
end. The server technology at the host end is -- and the
AOL system today is really agnostic when it comes to the
technology that it rides over.
In other words, we have AOL members today who are
accessing us to cable networks. We have them that come in
through ISDN. We have numbers that come in through ADSL.
So the server technology is really we'll work over any of
the new technologies.
So the modem technologies are -- that's about half
of the investment there. I should just sort of mention we
heard earlier on the panel that the time to write off
technology investments is actually kind of like relatively
quick in this industry. And we've already mentioned here
that we've gone from 2,400 baud to 14.4 to 28.8. The time
that it's going to take for the American public to switch
these technologies, the investments that we're making in the
access point technologies will themselves be written off.
I think it's important to think about the tradeoff
that businesses such as American On Line make every day. In
order to get more customers, we often look at cutting our
margins and we've done this historically in order to grow
our company, in order to grow the industry. And I find it
interesting to note that when the phone company, when the
ABOCs do the same thing in order to sell additional second
lines, they're looking for regulatory relief here.
So I would point out that the tradeoffs that we in
business make every day in an unregulated environment are
ones which are I'd like to see kind of expanded through the
monopolistic telephone industry.
MR. WERBACH: David, let me ask you, you had
mentioned some things that telephone companies, Internet
companies could do to work together in terms of sharing
information. It seems like though listening to people talk
though, that we've got two polar opposites here, people who
have very different views about how networks work. What
kinds of things can actually happen for the different
industries to get together in a way that leads to something
more productive?
MR. LaPIER: Well, I think in terms of examples of
interconnect agreements working, Matt gave real examples
that in their deployment activity, they're working closely
with crafts people and operations people in the phone
company. It's in some respects separable from some
competitive issues.
Other examples of how, well, for one thing, I
think that some clearer understanding of these network
problems and the way in which the network can be grown and
then proactively understanding how smaller Internet
providers can connect to the network and then working out
incentives to make those incentives more attractive.
MR. WERBACH: Okay. Do we have any questions from
the audience at this point? Could we get someone who hasn't
actually asked a question before? Over in the corner there.
MR. BAUMAN: While we're getting the mike over,
I'd say one indication of eagerness to work together is how
much we spend to make that work and the $130 million I
emphasized we're spending this year certainly seems to be a
strong statement of commitment to work with all of the ESPs.
MR. DEUTSCH: My name is Ken Deutsch. I'm with
Issue Dynamics. I just want to follow up quickly on Jamie's
math lesson and then ask a question. The ratios in Jamie's
math lesson, Jamie if I understood you correctly, have to do
with consumers connecting not the ISPs and what's happening
in business on their side.
And my understanding from the reports I've read
from the different local phone carriers is that the
problems, the congestion problems seem to be most acute at
the COs that are near where the ESP's actually connected to
the Internet. And if I understood him correctly, what Matt
was saying at AOL is that most of the 200,000 modems are
busy most of the time and if the network is configured for
one to seven ratio I think most is a little higher just in
terms of the math on that end.
And just another question in terms of the issue of
congestion whether or not there is congestion. And this is
directed both to Matt and to Lee and the question is what's
considered acceptable in your industries for actual
connection. Both what is it now, for instance, if I'm
dialing into AOL, what is my percentage chance of actually
connecting? And then what is the ideal that you strive for?
And the same thing on the phone network. What is
my chance of actually making a call and getting room for
what I'm paying for, either the busy signal or connection?
And what is the percentage you aim for in terms of what's
considered acceptable?
MR. WERBACH: Jamie, why don't you go first?
MR. LOVE: I think that this issue about the
difference between the residential consumers and the
business consumers is important. By the way, the 7 to 1
ratio I mentioned for Bell Atlantic is not for business.
It's for how they built out the residential networks. So I
was referring to that in the context of what residential
consumers do.
I think that in terms of your comments about the
average use, Bell Atlantic could do a service to the
Commission by providing them with both the ratio of the
build out for the residential network for the regular public
switch price network and tell them what the ratio is on
Pac Bell's ISPN and find out if Pac Bell has more incoming
lines for the consumer than the normal build out for the
residential network. And I believe that if you check that
out, you'll find that in their own ISPN that they currently
built out less than they are for the regular voice network.
Now, as far as the business consumers are -- the
business lines are concerned, that's actually a separate
tariff. It's a separate service. I'm sure that businesses,
you know, half of them are above average and half of them
are below average. The company gets revenues based on what
that average is. And if ISPs are above average, they may or
they may not be. I wouldn't be surprised if the AOL
business tariffs, if their usage probably is above average
given the low number of lines that they have.
That's sort of an interesting issue. It doesn't
mean that the residential callers are burning the network.
It means that the people that are calling don't have many
incoming lines and it's frequently busy. So I think that's
really -- and it's almost a coastal problem because Bell
Atlantic I think has focused more on that issue where Pac
Bell has focused more on what the residential users are
doing. So that's kind of the distinction you have to make
there.
I think what Bell Atlantic wants to do is to move
my grade people before it gets into the circuit switch into
some kind of a packet network which they have the technology
to do. It's really a question of pricing. And you have to
find out how serious the phone companies are to pricing the
service to the point that the ISPNs actually have an
economic way to do that.
MR. WERBACH: Lee.
MR. BAUMAN: Yes, you are correct that the
congestion issues are located at the offices to which the
Internet access providers connect. Pacific Bell has about
680 central offices and about 60 of those offices cover
about 90 percent of the Internet access concentration points
where the Internet access providers connect.
And so, yes, it's at those offices where the
connections occur that are the ones where we're spending
most of the money in adding ports and trunks in and out of
them. So it's very easy to isolate just what we're spending
for the Internet access traffic volume issue as compared to
the rest of the growth of the residents market itself.
You asked just what we see as high quality for
termination of calls and I don't have the exact number, but
it's approximately 1 in 100 is the number that may not get
through the first time. And so that's certainly an order of
magnitude different ratio than what is seen on a call to an
Internet access provider.
MR. KORN: I think the last question that was
directed to me was kind of what was the connectivity success
rate currently today? Prior to the introduction of our
unlimited, the success rate was in the 90 percentile range.
And today it's less than that. I'm not going to give you an
exact number, but it's the result of tremendous interest.
So clearly our goal is to return ourselves to that state.
Yes, you're right that the congestion does get
worse in the PSTN as you get closer to where the modems are.
We work real closely, we've been working really closely with
U.S. West in one of their regions that the precise exact
problem of call blocking. And just by bringing some
circuits and other COs and by relocating some modems to
other COs can in fact relieve the congestion issues there in
the PSTN. And to the extent there's any actions that are
possible at a regulatory level that help make the kind of
like moving calls from one CO to the other like really
cheap, really inexpensive, then that will help in using some
of the congestion issues in the PSTN.
MR. BAUMAN: I totally agree with the statement
that the Internet access providers are working well with the
local exchange companies to find how to work through this
current challenging time. So I just want to make sure that
none of my comments are in any way heard as in any way
critical of the current intense activity that the Internet
access providers have to handle this rapid growth in volume.
Frankly, I think people are working in the field in an
excellent manner today to continue to handle the customer
needs on both sides.
MR. PEPPER: On the question generated by the
floor, and that is we've had a number of technology
companies come in to us to talk about their particular
flavors of solving the circuit packet question. Taking the
data traffic off the circuit network at some point in the
network to relieve some of these pressures. I assume
they're all coming to you trying to sell their technologies
to Pac Bell to try and resolve that.
Can you talk a little bit about the various
solutions or potential solutions that you're seeing? What
are some of the advantages of some of these and how soon do
you expect Pac Bell and some of the other local carriers to
begin deploying these technologies?
MR. BAUMAN: Certainly. The concept which looks
to be most workable is one in which the call originating
with the customer is sensed at that end office, the first
point of switching, to determine whether this is a data call
or a voice call. So therefore, whether it should stay on
the circuit switch network or go onto a data network.
And at that point if this is a data call, say
Internet access call, the switch would route the traffic to
a trunk group which would then carry that traffic into a
dedicated overlay data network. And that data network would
then carry the traffic to the point of termination to the
Internet access provider which doesn't need to be close by.
Right now it needs to be close by in order that local
calling pricing would be utilized. Therefore, the large
number of modem poles are spread all around the landscape is
totally a function of the pricing configuration we have, not
the desirable technology arrangement.
And so we would provide or some other competitor
would provide this overlay data network and the call, the
traffic would then be carried to some convenient place for
the Internet access provider which as we heard earlier
distance is meaning less and less with technology. And so
that might be some distant point where a very large volume
of traffic to that Internet access provider could be
concentrated and handled in the very most efficient way with
the most efficient traffic means.
This would actually permit more competitors to be
in the market because it would be lower cost for people to
get into this business. There are a number of equipment
suppliers and software suppliers providing these
configurations and I think it is here now. We have lab
deployments. We have analyzed the configurations and
they'll work.
The key issue when you say, well, when will it
really come into place is it's when we can strike an
agreement with a first Internet access provider on a price
for use of such a configuration which will cover the cost of
that configuration. And the key reason why that's difficult
right now is that in California, the price for access lines
is about $15 a month including the subscriber line charge
and there's no per minute of use charge. And so when the
Internet access provider pays $15 plus their modem cost,
it's tough to get that up to the equivalent cost of this
data network which today looks to get about $45.
MR. PEPPER: Per month?
MR. BAUMAN: Per month. Per port.
MR. PEPPER: Per port.
MR. BAUMAN: Yes. So that's a very rough
comparison, but you can keep that in mind. You take $15
plus whatever the cost is of the modem pool is, the modem
pools plus their node configuration, their maintenance of
that and ask what that might be. But let's say that's
another $15 perhaps. You might be at $30. And we need to
make that additional jump in California another $15.
Now, in some states the basic access line charges
for business access lines are somewhat higher than $15. In
some states it may be as high as $30 just for the line. In
those states, I think they might be at the break even point
now.
MR. PEPPER: To what extent are therefore you
really talking about state tariffing issues?
MR. BAUMAN: Good point. You know, the FCC could
say, wait. This is a state issue because access prices, the
access line prices, do not include usage component and they
do not cover the cost. And so therefore, it's a state
issue. And so we go to the state and say, hey, state.
Please fix this. We need to change these tariffs. They say
no way. It's an FCC issue because the FCC has the ESP
exemption on switch access charges. And if only they would
change that, then that would solve the problem.
So we're kind of in the middle between this.
MR. PEPPER: Matt, do you want to --
MR. BAUMAN: The key point is, yes, there's a
regulatory issue here and we're glad to work with whoever we
can work with to get it solved.
MR. TREST: That, by the way, is what I referred
to as the alleged regulatory constraints that are preventing
them from closer cooperation with the ISPs.
MR. MAXWELL: Both Mike and Matt, you now heard
someone say this is the direction we would like to move.
You're the people they're trying to sell that to. Would you
like to comment on what they just said, what Lee just said?
MR. KORN: I was going to comment first.
MR. LaPIER: The data he was saying, we've heard
in some states the difference may be within ten bucks in
terms of what sort of triggered the device. And it seems
that sort of a lot left on the table. Or maybe kind of a
win/win opportunity there. Part of what you try and do is a
lot of the astronomical digital rates that you see for
things like ISDN service are based on really excessive usage
charges which should really not be an issue if you're into
the packet switch networks.
So what you might try and do is say what about as
an incentive say as you're connecting people with ISDN,
you're connecting closer to what a POTS line is and with no
usage charges because once it enters the package switch
network, you really don't have the same kinds of costs
imposed on the network.
And then you start to look at that ten dollars in
a bit different light because it sort of brings something
back to the consumer on the other side. In other words,
this is what I say win/win. I mean, maybe the phone
company's looking to get more money. An incentive to move
people to the service, maybe one incentive you could move to
the service rather than putting usage fees on POTS line is
to provide a cheaper digital line if you go through the
packet network.
In other words, to say the digital line may be
more expensive if you don't do the digital thing, but
cheaper if you do do the digital thing. That way what you
do is for the higher band width stuff which is where
everyone wants to migrate if the price is right. They all
start migrating to the packet switch network. You don't
mess around with the legacy POT situation and you really
move it in the right direction.
MR. PEPPER: Matt, have you been working with any
of these technologies that you talked about?
MR. KORN: We have certainly done trials with ADSL
and with cable, but not necessarily all of these
technologies. But my comment would really be introduce new
technology which has clear benefits to consumers. Price it
attractively, consumers will migrate. Consumers will use
it. Businesses will develop applications to use it.
Investment will not go without a return. We see this over
and over and over again. I'm not going to tie it to any
particular technology.
MR. PEPPER: No, except what I'm hearing Lee
describe is something that would be transparent to the
residential consumer. They're still at their end using a
modem, dialing in. But there's a service that you as AOL
would be buying from either Pac Bell or one of the
competitors to get the traffic off the public network into a
data overlay and not have to have modems at your end in
terms of modem banks. So it's really a question of --
MR. KORN: Price it attractively. Price it
attractively in a way that has a clear benefit to consumers
as well as to the business and you'll see migration to the
technologies.
MR. BAUMAN: I agree with that and the key issue
is attractive compared to what?
MR. WERBACH: We have a couple of questions from
the audience.
JOHN CURRAN: I have a question for Lee Bauman.
Given that the 60 COs that have that density of Internet
service providers are also some of the most high tech
regions in the country in the Bay area where there are many
corporations with very large dialogue pools that are used
for telecommuting due to the number of telecommuting
initiatives that we hold out across the country.
Given that the busy time on the voice network has
generally been during the daytime hours and telecommuting
ones during those same hours as opposed to Internet usage
which is predominately an evening activity on the off hours
of the network, have you looked at alleviating congestion by
using some of these technologies to work with corporate
users for their dial up pools which may actually exceed the
entire ISP dial up base?
MR. BAUMAN: We can certainly break this down for
you in detail. Yes, my answer is yes we've looked at these
various combinations and we'd be glad to show you how the
tradeoffs are made and how it works. And the residents
usage is creating additional investment in those offices.
MR. WERBACH: We have a question over here.
DANNY WEITZNER: Technology. I have a question
which I think is for Mr. Bauman, but others may want to jump
in. This is really taking Bob Pepper's question forward. I
want to understand how this sort of shunting and overlaying
method works in an ISDN environment. Jamie talked about
what I think was a -- he was talking about a packet switched
ISDN service. My understanding is most ISDN services are
actually still circuit switch services. You're talking
about spending large amounts of money, one way or the other
on this sort of shunting option to deal with your congestion
issues. How does this sort of play forward as there's more
digital access in your network?
MR. BAUMAN: Very good question. The call would
originate from the customer as it does now. The switch
would determine whether it's a call that should remain on
the circuit switch network or go onto the overlay network.
The switch would also know whether that call that's coming
in is an ISDN call, an ADSL call, or whatever flavor it is.
And it would then route it to a trunk group which would have
the appropriate conditioning circuitry on it to present it
to the packet network. So if it's an ISDN call, that trunk
would not need to have the equivalent of a modem in it to go
from analog to digital. It would be a less expensive trunk
interfacing to the packet data network.
DANNY WEITZNER: I just want to make sure I
understand. Is whatever the shunting technology you have to
put into place, does that same technology work whether
you're talking about an analog call or an ISDN line?
MR. BAUMAN: Yes, the most commonly proposed
approach is frankly fairly straight forward for decide where
the call should go. It's just what's the telephone number
that was dialed?
MR. LOVE: I mean, ISDN as it's currently
delivered is a circuit switch service. What I was referring
to is what a lot of people think would be sort of the more
efficient way to have the service delivered in the circuit
switch thing is just, I mean, if it's ISDN from your home to
the sort of central office, I mean, that's fine. Because
that's the local loop. You're not -- it's not a shared
facility. You're basically a dedicated line. When you get
to the central office, that's when the issue of congestion
sort of becomes interesting. The technology that Pac Bell
was talking about and other LACs are talking about is a here
and now thing. And that is the question they want to be
able to dump it before it enters the circuit switch network
into the packet switch thing.
And then the question is what they want to do is
they want to start holding the gun to the ISPs and saying
you're going to be paying 100 bucks per month or whatever
per line or some huge number of money per line for incoming
calls if you don't move to this packet switch network.
And other people that sort of don't like that
approach are saying, well, how about we do it a little bit
differently? How about we say that the digital services
which are now charging an arm and a leg for 70 bucks in some
states, or these huge numbers they have, why don't you
charge those things closer to their cost if it was routed
through the packet switch network as opposed to the circuit
network? Just sort of reversing.
I mean, we sort of start out with the idea that
the phone companies are making a lot of money. Profits are
up, stocks are perky like some people referred to. It's not
as if they're actually losing money.
And so when you start talking about kind of, you
know, in the current environment what needs to be done, our
first instinct isn't the same as the phone company's which
is to pack, you know, throw these really big huge fees on
the ISPs to sort of get them to do what they want, but to
rather ask the phone company to look what they can do to
contribute to the answer.
And part of it is to sort of let digital services
like ISDN or whatever the alternatives are going to develop,
start being deployed at a cheaper rate without usage fees if
they go through the packet network.
MR. WERBACH: Okay. We'll let Matt respond to
that, then Mike and then we'll take another question.
MR. KORN: One quick comment on it. Kind of in
the proposal from Lee, you're basically proposing, if I
understand it correctly, that Pac Bell does the analog to
digital conversion. And when you think about how America On
Line is constructed today, we use a variety of vendors and
suppliers, EBN, Sprint, ANS.
Competition in analog digital conversion is like a
really good thing for consumers because it generally
heightens the quality of each one of the suppliers because
they're all in competition with each other. It's ultimately
good for consumers.
So I would sort of shy away from any kind of
proposal where we end up with one organization which does
all the AD conversion because ultimately I'm not sure if
that will benefit the consumers.
MR. WERBACH: Mike, why don't you get --
MR. TREST: That was exactly the kind of situation
I requested when I say we want to encourage this cooperation
which was your question. Is this cooperation occurring in
the marketplace today? And in California, the very roll out
of any ISDN services were rolled out exactly this way by
placing one switch in a central area and remoting those
numbers through this technique to other exchanges in that
same area.
And I say if the Pacific Bell and the ISPs and
their market could cooperate in advance of that by sharing
information about that plan, we would not have had all the
fits and starts we had in the deployment of ISDN technology.
So I'm saying let's keep the band width of communications a
little more open than coming to Washington and hearing each
other across the table.
MR. BAUMAN: When I described the configuration,
you'll remember that I said route it to either our overlay
data network or someone else's overlay data network and that
would be the choice of the Internet service providers to how
they want it to go I assume or the regulators might want the
customers or whatever.
But I did say that. And so it is incorrect to say
that I'm saying that it has to be us doing the A to B
conversion. A switch could route it to a trunk group that
would be connected to somebody else's data network and the A
to D conversion would be done by that other party.
MR. WERBACH: It this an issue that you've
discussed with ISPs or is everything just the price that's
been a limit on putting the service in?
MR. BAUMAN: Right now it's pretty much focused at
just finding a formula that even will work. Another point I
want to mention is California is a good place for case
studies on this because of the large volume and so forth.
It's also a good place because the ISDN concern that's being
stated here on pricing doesn't exist in California and
Pacific Bell territory either. We have the lowest prices on
ISDN in the country.
MR. PEPPER: What is that price?
MR. LOVE: It's $24.50 metered from 8:00 to 5:00,
unmetered afterwards. It's got a new ruling now they're
going to raise within a year by $5.00 a month and put a 200
hour cap on the off peak use that's not metered.
MR. BAUMAN: We don't know what rates, we don't
know what adjustment might be. The California Commission is
actually meeting on that today.
MR. PEPPER: And how many ISDN customers do you
have now, residential, business? Do you know that?
MR. BAUMAN: Jay, can you help me with that?
MR. PEPPER: We can get that. I appreciate that.
MR. WERBACH: Okay. We have a question over here.
MR. NEVAS: I'm Steve Nevas from Cyberbridge
Associates. There is one technology that hasn't been
discussed today and that's broadcast digital television.
And I'm wondering if the panel or anyone here would like to
address the potential for it delivering the Internet via
this technology, whether over the air or by cable. And I
chatted briefly with David Reed and I know he has some
thoughts about it also.
MR. BAUMAN: I could comment on that. As you
know, Pacific Bell is actively involved in that business
also, broadcast digital television, MMDS. We have plans to
officially enter that this year in Southern California and
we've explored various technologies for providing Internet
access over that also. And we don't have, that's not
announced service at this time, but, yes, we've certainly
been exploring that.
MR. TREST: We have been participating in some
industry intentions to do that primarily from communications
entertainment companies. And the demonstrations look that
it is deliverable over the high speed component of the
network, the sonnet based infrastructure which characterizes
our backbone. But again, the subscriber portion is the
difficult piece.
MR. WERBACH: We've got just a couple of minutes
left. One question for everyone on the panel, anyone who
would answer. What kind of data would be useful for us or
for you and your companies in terms of better understanding
where the congestion roadblocks are, where the pricing
limitations are, and how to move forward and address those
problems in the network.
MR. TREST: Well, I could give one and get off of
my favorite rocking horse here. I'd like to have data on
the true unbundled costs for local loop services that are
hesitantly being avoided for ISP's direct access. We can't
get it and if we do the unbundled cost is not known too well
to us and it's true cost versus its charge which is alleged
to be much higher, I'd like to see what that data really is.
MR. BAUMAN: Our cost of exactly the type you've
mentioned is filed with the California Utilities Commission.
MR. TREST: Then it's my research lack. I'll
correct that.
MR. WERBACH: Anyone else? We seem to be having
disagreements here about information and numbers. What kind
of numbers?
MR. LaPIER: Some common sense of a model serving
area and the nature of congestion in that serving area that
could be pushed one way or the other depending on call
volumes and so on. You know, mapped to the data that you're
providing. That would eliminate some of the thud related to
whether the switches are being congested.
MR. WERBACH: Okay.
MR. LOVE.I think good data on usage, you know,
what the sort of length of the peak is now, the sort of
shape of it, how it's changed over the last five years as
people begin to use the Internet, how do Internet users
compare to voice users in terms of their actual minutes? I
mean, a lot of the sort of just basic statistical data.
And also, I think you really do need to look at in
terms of when people call Internet service providers, see
how Internet service providers are setup. I mean, if they
can only put five or ten percent of the customers online at
one time, that sends a, that's a bit of information which
you can use which is to say that that's a hard constrain on
how much they can be connected at one time.
And so I think that the Commission needs to, the
ISPs some of them are a little reluctant to share that
information. They consider it kind of proprietary, but I'm
sure that they give it to the government in some kind of a
form where you put it out.
MR. MAXWELL: What do you mean by hard constrain?
MR. LOVE: Well, okay. Let's say there's 100 of
us and we all have an ISP and he has ten modems. Well, only
ten of us can be connected to the ISP at one time because
there are only ten modems.
MR. MAXWELL: Why is that a hard constrain as
opposed to a soft constrain on the part of the provider?
MR. LaPIER: They can add more modems.
MR. LOVE: Well, maybe you call it a soft
constrain. What I mean is maybe it's a -- I don't want to
--
MR. LaPIER: There's a ceiling on the load that
can be on the switch is what you're trying to say.
MR. LOVE: Yeah, it tells you that of the 100
people, no more than ten of them at any one time are going
to be connected because they don't have, you know, there's
only ten modems they can call. I mean, that's just common
sense.
MR. MAXWELL: But not a hard constrain in the
sense that it's not possible to do as Matt is suggesting
moving from 1 to 100 to 1 to 25.
MR. LOVE: Oh, yes. It's true that they could go
from 1 to 10 to 1 to 5 or something like that. That's not
where they are. I mean, you have to deal with where they
are and you have to look at where they're headed, of course.
I think that things are moving in that direction, but I mean
a lot of times the people are kind of uninformed about how
much the Internet's actually used. They think they use it
more than they do. They think everyone else uses it three
hours a night because maybe they do. And maybe they're not
as ordinary and average as they really think they are.
Maybe they're kind of an exceptional person. So the real
hard data comes from the ISPs. They have real hard numbers
which they find it very -- they know exactly how many
customers and they know exactly how many modems. And you
take those two and you divide one by the other and you have
an interesting number.
MR. MAXWELL: I guess then that sort of the
obvious question would be for the purposes of understanding
this from the standpoint of the ISPs, is this data they
would be willing to share?
MR. LOVE: Well, they shared it with me. I think
they, but I mean, they don't want it published, you know, by
the company. But I'm sure that you could -- if you sent out
a survey or interviewed some of them, they'll tell you.
What they don't want you to do is to give it to their
competitors basically.
MR. WERBACH: Yes, I should mention also that
outside we had some copies of a survey that an independent
group called Voters Telecommunication Watch was doing of
small ISPs, asking questions of them on some of these
issues.
MR. BAUMAN: I would suggest that congestion is
not the key issue. Incentives to invest is the key issue.
What we heard here is just a matter of being able to justify
buying another modem. So it's not the congestion that's the
issue. It's incentives to invest and how do those
incentives cause the competitors to invest in an efficient
way for the future? That's what we all must focus upon
because there's where the core problems exist in this whole
issue.
MR. PEPPER: Well, with that we thank everybody.
We're a few minutes over time. This has been another great
panel. We will be reconvening at 2:15. Before people
leave, the demonstrations are down the hall in room 845.
They're now operating. So during lunch, you should take the
opportunity to go in and take a look at what they have down
there. Thank you. We'll see you back here promptly at
2:15. Thank you.
(Whereupon a lunch break was taken.)
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// A F T E R N O O N S E S S I O N
(2:19 p.m.)
MR. PEPPER: I think everybody, well, not
everybody, but everybody had an opportunity to see the
demonstration that's going to continue in Room 845 until
5:00 o'clock. We're going to be finishing up before that
time. So it will be possible for people who have not had an
opportunity to see the demos down the hall to do so.
They're really great.
I had a question about whether the proceedings
will be available on videotape and the answer is yes. We
have -- there's information outside on how to obtain a
videotape of today's forum. This afternoon's panel will be
introduced by Elliot Maxwell. Elliot.
MR. MAXWELL: I'd like to welcome you all back and
to welcome our panel members. The focus this afternoon
really is on affordable access. We talked a little bit in
the morning about sort of access technologies, later in the
morning about possible network congestion, ISP congestion,
the problems, if in fact people do have access.
Now we get to I think one of the very important
public policy issues for the Commission is to ensure that
places that traditionally have been undeserved and
institutions that traditionally have been undeserved have
access. And this is an area that has gotten lots of
attention as you all know through the universal service
proceeding.
There's been a focus in the Telecommunications Act
of 1996 on access for schools and libraries and world health
care providers. And we've asked some of the people who know
the most about these issues to come join us to talk about
this, this afternoon.
Let me briefly introduce the panelists because I
think most of you know them and they have been participants
in the past with us in trying to better understand these
issues. The panel will start with Glee Harrah Cady who's at
Netcom and who is the Manager for Public Policy of Netcom.
She also was like Madam Defarge in the earlier panel sitting
there knitting. And we wondered whose head was going to
roll.
Aside from that, she also has a long history of
involvement with the Internet running back to the time when
people thought of it as the NSF net and was involved in
trying with Netcom to figure out what markets they should
enter. And so this notion of how the access providers,
Internet service providers will migrate is of interest to us
and something in which he's deeply experienced.
Also joining the panel is Peter Harter who
represents Netscape. At a year and a half of Netscape, he's
probably one of the founding fathers, or persons if that's
more correct, and goes through the same kinds of issues of
dramatic growth that the folks from AOL were sort of facing
at the earlier panel. And obviously, the question of how
it's going to be used, what's going to be available to them
is important to them as a business and important to us as a
matter of public policy.
Finally, Danny Weitzner, of the Center for
Democracy and Technology is here. Again, an Internet
veteran. Here sort of the starting date is about 1991
before many people had thought about the Internet or heard
of it or it certainly had become a mass market phenomenon as
of '96 we're told today. And he worries about issues of
public policy for the Center which focuses on the sort of
representing the public interest in regard to a number of
questions including questions of censorship, first amendment
rights and public access as well. So we're delighted to
have them here with us, delighted to invite the audience to
be participating as they did in the earlier panels. Why
don't we just start it off with Glee?
MS. HARRAH CADY: Thank you, Elliot. Elliot spoke
about the area of expertise that I have that might be of
interest to you all and I'd like to talk to you a little bit
about how we selected certain kinds of access points, why we
put them there and why we didn't put them other places.
Netcom as you all know is a publicly traded backbone
Internet provider. And we have a responsibility to our
customers, our employees and our stockholders to try and
provide good service. That's what the S in Internet service
provider stands for. And so this is in light of
illustration, not an advertisement.
This is the Netcom backbone and this shows the 230
access points in the United States. You can see that there
are some very large lines that indicate speeds in between
the two points and as all things printed in the Internet
environment, of course, it was out of date the minute we
printed it. For any of you who'd like to come up later and
look at the out of date version of the Netcom Internet, I do
also have a smaller one and will be happy to send you an out
of date one if you call us up.
You'll nonce that there are few access points in
places where there are few people. One of the reasons that
that's true is that there are also fewer computers there and
the computers that are there don't also necessarily have
modems. So we had market research information from people
who sell computers, from people who sell modems, from people
who sell retail software. We actually distribute our
software through a large retail network of people like
CompUSA and that sort of service. So that we knew where
there were people who were interested in buying our product.
We do know that there are people who are in
Cheyenne, Wyoming who are interested in buying our product,
but we didn't believe that there were enough of them in
order for us to actually go in there. And let me tell you
why.
Without regard to how the backbone is constructed,
to start a local access point on network, we need -- this is
the startup cost that I'm going to talk about first. $5,000
to locate the site including travel and talking to rental
agents. We may need about $5,000 in new power and wiring
and new construction costs in order to make sure that the
floors are heavy enough to withstand the racks that are
going to be put in there. If the building isn't air
conditioned, we absolutely need ten tons of air conditioning
for the minimal amount of set. So that's another $15,000.
And we have a recurring rental cost across the country
averaged at about $600 a month.
Our telecommunications costs, for each access
point we put in, we require three T1s. Two are minimum for
each dial up location. Those are going to be handling the
modems. There are 24 modems on each T1 line. It costs us
$1,500 to install each T1. There's another T1 line that is
the back haul from that location to our local network hub or
the nearest local hub which is another $1,500. So there we
are a $4,500. Our monthly recurring costs for the modem
baseline are $45 per line per month on the channelized T1s.
The link to the hub, once again this is mileage sensitive,
it runs around $2,000 a month. It depends on exactly what
where we're trying to link to.
For example, Austin to our Dallas hub may be more
expensive than Palo Alto to our San Jose hub because it's
distance sensitive. But across the backbone of the network,
it's running about $2,000 a month.
We also in places where we can operate ISDN
callback so that when something goes wrong in the links
between each access point and the network hub that we can
use those lines to call back to the hub. Idle ISDN services
cost $150 a month and if we have to put them in service,
that costs us $2.00 a minute. It also costs us I think
around $150 a line to install and we need four lines for
lines for ISDN callback. I'm sorry, I don't have that one
written down. So that figure may not be accurate.
We also put in two measured business lines in each
access points so that we can call up our routers and
terminal servers off the network band in case we can't get
to our routers via our own network. So that we use that for
maintenance purposes and also for power cycle up and down.
Probably a lot of you are familiar with equipment that will
allow you to turn on and off the power of something remotely
and so you need a phone line in to do that.
So that's where we are on that. And hardware
costs. A modem rack with 48 modems and 12 modem cards runs
around $40,000. Then you have to have a frame for a modem
rack. You have to have routers, terminal services, CS use,
DS use, the two small modems which are not too expensive, a
telephone, the power cycling equipment and an
uninterruptable power supply and that's another $20,000.
We also pay about $1,000 a month in monthly
maintenance fees to have people go out and switch out dead
modems, fixed cards that have gone dead, redo routers and
all of those kinds of things. And while these happen to be
our costs, I don't believe that they're out of line with any
of the other large service providers.
Smaller service providers who are not operating as
large network and who aren't operating the smallest set at
48 modems may have different kinds of costs, but they won't
be dissimilar. I mean, they will be about the same is what
I'm saying, particularly in telecommunications costs because
T1 lines are T1 lines. And it doesn't make any difference
if you're a small company or a big company when you're
buying them.
So that was I wanted to say that I don't have any
magic answers for that. So you see why it would be
difficult even though culturally desirable to put access in
the upper peninsula of Michigan or the far western part of
South Dakota or Cheyenne, Wyoming which actually is one of
my favorite towns in the country. Why we wouldn't
necessarily choose to do that if the payback is not there.
So the choice that we made was to operate an 800
network which we rebill per minute and it comes out to about
8.3 cents a minute in the lower 48. For Alaska and Hawaii,
our costs are a bit higher. So it's $6.95 an hour which is
divide by 60 and you can figure it out.
We do bill by the minute and a lot of people do
use that service. Those are not the same people, obviously,
who would be using the service if there were a local
provider for them.
The Internet, however, is a very grass roots
organization and I was speaking yesterday with John Curran
of BBN and he was telling me about a spot in Western
Massachusetts where there was seven small Internet service
providers fighting over a house, a fence and three barns.
Another sort of amusing remark saying this is not a heavily
populated area, but it's being very well served. Even
though if you compared my local access point map with John's
or someone else's access point map. It would look like
there's a gap.
Finally, I want to say that another grassroots
effort was done by Senator Domenici and the Benton
Foundation and their report is due out very soon from the
Benton organization. For those of you who are not familiar
with them, they are at WWW.denton.org.
And they did a workshop that was to try and focus
the attention of New Mexicans on new opportunities for
economic development provided by services like the Internet
and they gathered together a bunch of small Internet service
providers in New Mexico among which we are not, all right?
So I was not at this meeting. And they talked about the
barriers and the suggestions that they could think of that
would help them free access. And I commend to you their
study. Thank you. [applause]
MR. HARTER: First, let me thank the FCC for
inviting me to speak this afternoon and also for those of
you who came in this morning late or just go in for this
afternoon's session. There are copies of my remarks out on
the table in the hallway.
The three basic points Netscape has on universal
service. We've been commenting throughout the whole process
last year and through all that our thinking has to evolved.
And to summarize, our three basic points that touch upon
affordable access and they're as follows: universal
service, universal design and universal access. And I have
brief definitions for each one of those three.
Roughly we call those the three pillars of
universality. Universal service can be defined as
affordable Internet access and it requires a competitive,
efficiently priced basic service. And I used basic service
as opposed to POTS, telephone service, because I don't want
to prejudge what the basic service is. So allow me to
indulge in a little ambiguity there.
The second pillar is universal design and that
could be defined as Internet services and applications that
should be accessible to persons with disabilities and
disabilities being very broadly defined as a conference
occurring out in the Silicon Valley in April. It's the
sixth annual world wide web conference mounted by Stanford,
W3C which is the world web consortium from MIT and a few
other institutions. And that conference theme is
accessibility.
And I might want to note that that issue of
disability access has been part of another rulemaking or
comment period here at the FCC after the Telecom Act and the
W3C has taken upon itself at its most recent meeting in
London last week to focus on societal issues. And the big
thrust of that will be trying to move how you take the GUI,
the Graphical User Interface, which is world web and make it
accessible to all kinds of persons with disabilities.
And hopefully through an open standard proceeding
as opposed to putting the onus upon particular companies and
their particular products, proprietary or open, no matter
what technology it is, through an open public discussion we
can really get the best solutions to market quickest. Sorry
for that digression.
The third pillar in this family is universal
access and that can be defined as global Internet access
requiring open, operable and competitive international
telecommunications regulatory policies. And again, those
three bullet points as well as the gist of what I'm going to
say and my summary remarks are available outside.
Some key points in universal service could be that
schools, libraries and health care facilities should receive
technology neutral subsidies, meaning don't lock them into
rapidly obsolete network or access technologies. Whatever
happens with the universal service proposals that are going
on these days, the money and how it's going to be spent, I
think to overlook the fact that people out there in schools
and libraries and rural areas are very hands on self-reliant
types of persons, very creative and they have been getting
on the Internet for a long time.
Prior to being at Netscape, I did a little non-
profit work by getting access to schools and libraries in
rural areas, free nets, community assistance systems,
specific nets. They had a variety of names. And it wasn't
just one movement. It was a collection of many different
movements, not just in this country, but Canada, Finland and
about seven other countries, about half a million users of
these systems loosely combined.
And the fascinating thing was you see modem banks
in the basements. They use Macs. They use Unix. They use
PCs and just freeware and donated equipment, even use old
boat anchor mainframes occasionally. Universities allowed
space on their computer service to piggyback on their
Internet connections.
And having seen that, starting all the way back at
Case Western Reserve University in 1986 and seen AT&T,
Ameritech, Apple Computer and many other companies and
institutions get involved, it was just using what resources
were around your neighborhood to make it work.
And I think so just dumping a lot of money on one
particular solution or the Cadillac plan. And if we go
slowly, we won't invest in technologies that will be out of
date tomorrow. And as we all know, this medium is moving so
quickly that we invest a lot of public funds into something
that can be not the best technology for America's school
kids or the libraries or the health care facilities. I
think moving slowly forward, progress, examination, trying
to get creativity from the grassroots is probably a
reasonable course of action in the area of universal
service.
Another point in the pillar of universal service I
want to mention is Netscape believes that there needs to be
a proposal for the disaggregation of Internet access from
Internet services under Section 254(h) of the
Telecommunications Act.
And what I mean by this, you separate access from
services. Many companies are not just providing a wire and
say here. Here you go. Here's your account. No, they're
bundling value added services which consumers want and many
companies are being very creative, very entrepreneurial.
(Continued on next page.)
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// MR. HARTER (Continued): They build customer
loyalty, brand name identity and they can make their money
that way, not just on having a plain wire of adding content,
having hosting services for personal home pages. There's a
whole host of new value to services that are being bundled
in with the plain old axis, the plain wire.
But from what GUI said, or you just look out
there, schools just need some way to get to the Internet.
They need TCPIP. We can talk about drilling wires through
the schools. You can run into asbestos problems. You can
talk about wild slants. You talk about paying for all kinds
of content into the classroom, additional access. I just
think it needs to be a consideration of do we really need to
have everything at once, or do we just get TCPIP to the
school building and let the --
What's that?
MS. CADY: Actually, we call that Internet dial
tone.
MR. HARTER: Oh, Internet dial tone; I like that.
But then again, I've been called a TCPIP bigot before so
I'll have to live with that bias.
And the social concern about if we don't have this
proposal considered at least for desegregation, we really
risk a problem we've seen in other media before -- a
concentration of media -- and I think if universal service
is a way -- a back channel or back door -- for services that
are bundled to be subsidized and put into schools, I think
it prejudices the idea of having -- not on bundling, but
just getting the bare minimum basic wire out there.
And if those providers who bundle services want to
just discount the hell out of what they added onto the wire,
and they want to get in there, great; that's fine, too. But
somewhere in the thinking here there needs to be a
separation of access from services.
Since I had a segu‚ in my opening remarks about
universal design, I'll skip over that for now and move into
some final points about universal access. Looking at the
international scheme on this point, we've been encouraging
the FCC in our comments to promote competition
internationally and trying to get people to use our products
overseas.
Being in Switzerland at any point in time -- I was
there for three weeks in December for this copyright
conference to the IPO. The best I could get was 12,000 BPS.
You can't surf at that rate. There were some terminals in
the conference center put in there by the International
Telecommunications Union, and that content was pretty good,
but that was a special facility. So the state-owned PTT in
Switzerland just has an infrastructure problem, and many
people complained about that during the three weeks of the
conference.
I think if we're going to lead the information age
and build a bridge to the 21st century, whatever rhetorical
phrase one would choose in this town, trying to get people
to get quality through-put in these markets is a number one
priority.
And I think I'll leave one controversial comment
-- and then I'll pass the mike to Danny here -- there's an
intersection, interestingly enough, between bandwidth and
copyright. Some of the people who fought on the issue of
replication reproduction in Geneva, on copyright
reproduction -- the Internet transmits information,
transports data by copying it along the way; through the
routers, even on your machine, on your desktop.
You have client-side cash and there's temporary
stored information. You have service out there in-between,
called proxy service, and there's cash inter-temporary
copying or reproduction there. So all this temporary
copying goes on, and without it the Internet wouldn't work.
It would suddenly bog down. Engineers put cashing in there
for one reason, performance, to optimize and make most
efficient use of the network facilities available.
And some institutions that fought really hard to
get this issue taken out of the copyright treaty because the
line within the treaty would have made such reproductions
infringing, and thus would have changed how we can use
reproduction on the Internet.
The schools and libraries really fought hard on
giving this controversial aspect of the treaty taken out,
and while there are legitimate copyright concerns to be had
with this broad reproduction, I think if we're really
talking about bandwidth and access, and we're talking about
schools and libraries, reproduction in the copyright arena
has a nice intersection here that is worth us thinking
about. Danny?
MR. WEITZNER: Well, that's an interesting note.
Good afternoon, everyone. I've just realized that
the last four or five presentations I've done, I've been the
last person on the last panel. So, I don't know what that
means, but I do notice some eyes kind of closing and people,
you know, probably wanting to get on the rest of their
afternoon.
I will be very brief. I don't impute any
intentionality. I think it's my fault.
I really want to thank Bob and Elliott and Kevin
for putting this together, and the whole Commission. I
think it's really particularly appropriate that we're
getting together here to talk about these bandwidth issues,
because it was really just about five years ago that the
networks of the future for -- I don't remember if that was a
forum or what exactly, what sort of thing it was, but it was
a discussion of the beginnings of a lot of these issues. It
was the first time, I think, a lot of people around here
focused very much on these issues, and you know, that was
just five years ago, a little less than five years ago; I
think it was May of '94 -- '91 rather.
And an enormous amount has happened, really, every
year since then. Just about this time in 1992, four years
ago, the NSF net was finally commercialized after a fair
amount of pushing and pulling and tugging and shoving. 1993
was not as good a year. It was the year of the clipper
chip, and that was probably just an example of what not to
do.
But then 1993 and 1994 really were the years when
the Worldwide Web sort of rocketed into everyone's
consciousness, and they were also the years during which,
all of a sudden, when I would talk about the work that I was
doing that my friends and my family would actually begin to
understand because they had heard of this thing called the
Internet.
1995 was also not a very good year. It was the
year of the Communications Decency Act, but, hopefully,
we'll have a better year in 1997. And, I guess that what is
really striking to me -- and I know that this is a panel
about access and affordable access, and I think affordable
access is critical. I think it's a very hard problem to
figure out how to really continue the move towards more
affordability and higher bandwidth.
I guess that I am going to close this on a
somewhat contrary note and say that there are other issues
to consider besides just bandwidth and affordability.
Those are critical issues, clearly, and without affordable
access and without sufficient bandwidth, we get nowhere.
But what's interesting about the last five years,
starting with the Networks of the Future forum, is that the
Internet has developed in absolutely extraordinary ways with
absolutely inadequate bandwidth, at the ends at least.
Clearly, there has been a lot of bandwidth available on the
backbones. Many speakers have talked about the fact that
backbones have grown in a relatively open market
environment. Backbones have been able to expand because of
inter-exchange and other sort of special access facilities.
But at the ends of the network, especially with
regard to residential users, the bandwidth has been
terrible. It has been affordable, but it has been really
lousy. And I think you could draw a graph with curves going
in two opposite directions, where you would have at the one
end people in telecommunications policy circles fretting
about how to increase bandwidth with nothing happening, and
at the other end the Internet market just kind of more-or-
less ignoring those discussions, developing at an incredibly
rapid rate.
So, what I want to suggest is that as important as
affordability is, and as important as high quality, high
bandwidth services are, the Internet, I think, has actually
succeeded in having brought incredible benefits to this
country and has the promise of bringing even more incredible
benefits because of reasons that have nothing to do with
bandwidth and not much to do with affordability. I should
correct that; it has a fair amount to do with affordability,
but it certainly has very little to do with bandwidth.
I want to just highlight, very quickly, four
architectural aspects of the Internet that I think have
really made it a very important forum for democracy in this
country, an important new means of democratic
communications.
I think that most of you who are here, and
certainly people who are listening on the Web, already know
this so I'm not going to belabor it, but the Internet has
really turned upside down people's relationship with
communications media. And my organization, the Center for
Democracy and Technology, is here focusing on this issue in
some part because we want to make sure that the Internet
remains affordable, but really in many ways more because we
are tremendously excited about the First Amendment potential
that the Internet has.
The Internet enables people to communicate in a
Democratic society such as ours in ways that we have simply
been unable to communicate in the past; since, you know, the
proverbial town square when we could all go out and talk to
each other. We can't do that very much anymore, but we do
have the Internet, and I think that that's an
extraordinarily important development for our democracy.
I also think it's extraordinarily important for
what I've always regarded as one of the Commission's core
missions, which is to promote a diversity of information
sources and promote access to a diversity of information
sources.
The Commission has also tried -- there was
reference to video dial tone proceeding and other such
proceedings to advance this goal. It's been very difficult
in the broadcast arena. The Fairness Doctrine has been very
controversial, and I'm not even going to speculate about
whether it was ever effective or not because it was before
my time.
But I think that the Internet presents itself as
an extraordinary model for promoting democratic discourse,
and my simple suggestion to the Commission is to keep in
mind the characteristics of the Internet that make it such a
rich, diverse environment. And whatever the Commission does
in trying to promote bandwidth and keep things affordable,
to keep these architectural characteristics in mind, and I'm
going to go through them very quickly.
First of all the Internet, as others have said,
beginning with, I think, John Carr, the Internet is a
decentralized infrastructure. There are no gatekeepers on
the Internet. There is no centralized point of control on
the Internet, and very simply what that means is that anyone
who wants to put up a Web page on the Internet can do that
without getting permission from anyone else. And that is a
unique development, in at least in the history of American
communications media, and I think it's just very important.
The second aspect of the decentralized nature of
the Internet is that really, unlike mass media, it is an
abundance of communications opportunities. If you want to
put a program out on radio or television, you've got to go
find the radio station or find the TV station or find the
cable operator, negotiate for channel space.
It's complicated, it's expensive, and what makes
it expensive and complicated is that there are only a
limited number of channels on the radio spectrum, and only a
limited number of channels on your television, and only a
limited number of slots on any given cable network. That
makes them expensive and it makes it hard to get at. We
don't have that problem on the Internet. So, this
decentralized and gatekeeper-free environment is
tremendously important.
Secondly, the Internet is bi-directional and
interactive. This is obvious; everyone who uses the
Internet knows this. But if you think about the Internet in
this regard in contrast to television or radio, when you're
listening to a political debate on television, you can't
talk back to the candidate. It's that simple.
And you certainly can't talk with the other people
who happen to be listening to that same program. The few
politicians who have been brave enough to go out onto the
Internet and engage in chat sessions and things like that,
have discovered that the Internet is quite a different
environment. People can talk to each other. People can
associate freely. This is a critical value that the First
Amendment of the Constitution has always tried to protect:
people's ability to associate.
Well, it's very hard for me to associate with
someone in Wyoming, especially since GUI doesn't have a
"POT" there. I'm sorry; I know. But the fact is, and what
is wonderful about the Internet, is that we all can
associate with people in Wyoming over the Internet even
though, you know, the leading Internet service providers may
not have POTS there, because as GUI pointed out, other
smaller service providers do have that POT.
So, the bi-directional nature of Internet
communications is tremendously important and has to be
preserved, I think, especially as we look at some of the
discussions in the cable industry about how to enter the
Internet market. Some of the early discussions of the at-
home network I think raised a lot of questions about whether
that was really going to be an open network the way the
Internet has traditionally been open, and I think this is an
important point to watch.
Again, picking up on GUI's point, there are since,
at least -- well, really there have always been multiple
access points on the Internet. In the early days of the
Internet, there were requirements that you were affiliated
with a university, or the government, or a research
institution in order to get on.
But from the very beginning, there were always
multiple paths to get to the Internet, to get to the
backbone, and that, I think, has been very important. It
means coming back to Cheyenne, Wyoming. Even if a large
service provider decides not to provide service in a given
area, smaller ones can come in. This is very important.
And I think that it's that diversity of service,
the fact that you have large service providers, small
service providers, service providers which focus on large
business customers, others which focus on maybe large
residential customers in urban areas or highly-populated
areas, and then others that focus on rural areas. There are
a number of Internet service providers who really have made
a specialty of rural, hard-to-serve areas, and I think it
would be useful for the Commission to talk with those folks
and see what's happening. I'm glad -- I didn't know about
this Benton project; I'm looking forward to seeing that.
But it is that diversity of service that I think
will help assure that there is really a diversity of voices
on the Internet, that you won't be shut out of the Internet
simply because of where you live.
Finally, and you all know this, the Internet is an
environment that is characterized at its core by open
standards; John Curran mentioned this. But we only have the
Worldwide Web. We only have advanced IP routing protocols
because the Internet's an open standard environment. The
Internet has gone through, in just the five years that we've
been talking about, extraordinary developments,
extraordinary changes, and they've been able to happen
because it's an open environment.
So, my closing thought is that affordability is
critical, and figuring out the very real issues about making
sure that schools and libraries and other community
institutions have access is critical. I honestly do not
present myself as an expert on those issues and hope not to
minimize them at all.
What I do think is equally as important and an
absolutely necessary aspect of any policy that is trying to
promote broader access to the evolving national information
infrastructure, is to keep these unique characteristics of
the Internet alive. I think that we've all been just handed
this extraordinary new medium by a relatively small number
of people in this country who have worked very hard to
produce it, and it's grown, I think, more than anyone would
ever have expected. And I think that our task now is to
preserve what's unique about it and make sure that more
people have access to it.
Thanks very much.
[Applause.]
MR. MAXWELL: In the earlier panel we talked a
little bit about when the second million broadband access
subscribers would be met. That panel could leave people
either sort of more depressed than they were during the
conversation of the Telecom Act or with a belief that there
was some reality that had set in. People could interpret it
very differently.
I'm curious as to your perspectives as to whether
you would be optimistic about a vision in which we expect
that there is broad access in traditionally underserved
areas, or pessimistic about the kind of coverage in the next
three to five years; whether it's a problem that will go
away because of a natural evolution in the marketplace, or
because of wise decisions on universal service or other
things; or whether it's something where we are going to have
to simply say, "This will take time. It may take a lot of
time and there's not much we can do about it."
MS. CADY: I guess that was probably more directed
to me, being affiliated with a network provider. I think
there's a difference between broad access and broad band
access. In the broad access, meaning access is available
today, to everyone who can have, you know, anything from --
I suppose even 286's in Minuet would work -- and a 1200 baud
modem. Now that's not ideal. You know, you would not want
to try and submit X-rays across that kind of a connection.
MR. MAXWELL: Not if you wanted survival.
MS. CADY: No.
[Laughter.]
MR. MAXWELL: It depends how serious the break is.
MS. CADY: Yes; that's not a mission critical.
You don't want to run mission critical on a 286 across the
net today.
So, I think that I would like to make that first
point. You know, anybody can get on the net today, assuming
that we manage to get the appropriate equipment somehow. I
think what is going to be harder to predict is, when does
that underlying access -- just the availability of it and
the intersection of the need for the broader band meet in a
way that is going to be reasonable. When can I get an X-ray
from an outlying agency on the Rosewood Sioux reservation
to, I don't know -- the Mayo Clinic or something? And I
wish I knew.
Those kinds of things probably should be handled
via some of the newer satellite things, where you're trying
to transmit really wide band width things, and maybe we
could do something there. I wish I had a magic answer,
because you know how much I'd like to have that magic
answer, but I don't.
MR. WEITZNER: I would just add that I think that
this holy grail of broad-band service to the home has been
around for such a long time, and it's hard to see very much
progress in that direction. I, frankly, don't count most of
the trials that are going on as progress in that direction.
Back -- I can't remember when -- Leland Johnson did a
terrific study that basically showed -- you know, you want
real broad band for video, and that the number of
applications which require truly interactive broadcast
quality, or now even higher quality video, is essentially
nil is the residential market.
MS. CADY: Games.
MR. WEITZNER: Sorry?
MS. CADY: Gaming technology. Gaming technology
is likely to pay for it, actually.
MR. WEITZNER: Well, but whether you need broad-
band capacity to do that, I don't know. I think that it's
very hard to know that far out into the future. My belief
is it is pretty far out into the future. I think that just
in the efforts to make the first step to digital access to
simple basic rate ISDN, there has been some amount of
progress.
I mean, I think it's worth noting that you open up
a MAC warehouse or a PC warehouse catalogue today and you
find ISDN terminal adapters for pretty close to the price of
state-of-the-art analogue modems. That, I think, is a sign
that we're making sort of slow, incremental progress towards
digital access. Whatever anyone says, that is, I think, the
best indication of where the market is going.
But very few people use those products. I think
over time more people will use them, but getting to multi-
megabyte, bi-directional, broad-band service just seems to
me like an awfully long way away, and I think it's probably
-- if that we're adopted as a policy goal, I think that
could well lead us in the wrong directions. I think we
should be focusing on nearer-term, more achievable goals.
MR. MAXWELL: Pretty good bandwidth.
MR. WEITZNER: Pretty good. Pretty good is great.
And I really do think the experience of the Internet is that
it's gotten by with pretty good bandwidth, and it's done
amazing things. And there are lots of ways to compensate
for lack of bandwidth. It's not, as GUI is saying, it's not
ideal; it's never ideal; you would always like more, but you
can get by and do an awful lot, and the net has.
MR. MAXWELL: One of the interesting numbers that
comes out of this panel and on the earlier panel, if Lee
Bauman's number was right and you had people, subscribers,
spending an hour a day essentially calling an Internet
service provider, and you then said for those people for
whom it is not a local access service, we're talking about
$5.00 a day, you know, running from $5.00 to $10.00 a day on
distance charges to a provider, that may not be a sufficient
situation for us to be satisfied with for access.
MS. CADY: I think, Elliott, it depends a lot on
why people are on. Since -- NetCom used to have a billing
mechanism that allowed people to remember that they were in
a shared environment; that is, we charged a certain amount
for so many hours of prime time and then when it wasn't
prime time you could do whatever you wanted. And, at that
time, the per session usage was, you know, lower than it is
now, and since we, for competitive reasons, went to a flat
rate without limit pricing, we've seen monthly on our local
call part of the network -- in other words, when you
aggregate all of our access points across the United States,
the per session time is going up in small increments. But,
it's like, you know, the day is getting longer as we get
closer to the summer solstice. And so, you know, two or
three minutes a month per customer over 600,000 customers is
a lot of minutes. This is a similar point to the one I
think Mr. Bauman was making, and I would agree with that.
The number is creeping up in our 800 service in
that we're getting more customers and we're getting a little
bit more, but people on the 800-side of the service are very
aware that they're paying per-minute charges and so they
tend to be on and off much quicker, all right? And so you
don't see -- I don't know whether you call them bandwidth
hogs or what -- modem campers. You know, you don't see
modem campers on the 800 lines, whereas you might see them
in these more congested areas where people are afraid that
they won't get lines.
MR. MAXWELL: Any questions from the audience? In
the back there.
MR. DAHNKE: I'm Roy Dahnke from the SETA
Corporation. I don't want to repeat a lot of the things
that have already been discussed, but one of the things that
I've not heard any discussion on so far is the possibility
of paradigm shifts which I think are already just beginning
to start, where people are using computers to -- we used to
call "work at home" -- but I think it's really where you
have business access to do your work, you know, consultant
types of work all over the world. It's not just a case of
being able to be 30 or 60 miles away from home with the
ability to do work internationally via the terminal. And I
think that's one of the things you want to consider as you
move forward. Thank you.
MS. CADY: If I could just respond to that, I
think most of the Internet service providers do consider
that, and many of us are part of consortiums or part of
larger organizations that allow global roaming access to our
networks and so we're very conscious of what our business
customers want.
MR. SHAPIRO: My name is Andrew Shapiro. I'm from
the Twentieth Century Fund. I have a question for Danny and
the other panelists. I agree about the architectural points
that you mentioned that are characteristic of a democratic
Internet, so to speak, and I wonder to the degree to which
we think there should be policy or regulatory incentives
eventually.
I mean this is a question actually relevant to the
first panel, to the extent the guy from Cable Labs was here
and also from the second panel, the AOL representative was
talking about local cashing. And one of the questions about
local cashing is whether that in some way goes against one
of the policies you were talking about, about no
gatekeepers, and the kind of content neutrality between your
average, individual teenager who has their own Web site and
let's say Time-Warner or CNN who has their own site and
they're supposed to be sort of one is as easy to access as
the other. And with local cashing and private networks and
things like that, there's a question as to whether that's
really going to be so and whether there should be policy
prescriptives in place to deal with that, which is the
question.
MR. WEITZNER: Well, I never thought cashing would
be such an interesting subject. I guess that I think that
not withstanding the democratic nature of the net, all
content on the net is not equal and it is not equal for a
lot of reasons.
One interesting reason is what you pointed out,
that it may not be as easy to get to, and that could be
because it's not cashed anywhere else or it could be because
the Web site or the host for the content is sitting at the
end of a dial-up line as opposed to at the end of a T-3. So
those are all issues that I think differentiate between, you
know, the New York Times on the Web and a handbill on the
Web.
It's not obvious to me what sort of policy steps
one would take. I guess just my own my own experience in
being a Web surfer is that the valuable content, I think,
still does win out over glitzy or easy-to-access content in
the end, and I guess that I would have First Amendment
problems at the other end getting the public policy process
too heavily involved in favoring one kind of content over
the other or trying to balance out content.
I think the Web does a -- the Web, especially with
search engines -- does a reasonably good job of giving all
content a fighting chance, at least. It's not risen to the
level of disparity or inequity that I think we need to do
something in the policy arena.
AUDIENCE PARTICIPANT: Can I just ask if anyone
from the Commission wants to address that?
MR. WERBACH: We're just here to listen. We don't
do anything; we just listen.
[Laughter.]
MR. HARTER: Actually, I have a comment on that,
the gatekeeper point the gentleman in the back of the room
made in his question, that there is a technology already out
there that prevents gatekeepers from occurring with this
local cashing issue.
If you author a Web page, you can put a command in
the header field called a progma, and it basically tells
proxys out there -- and a local cash is only created by some
kind of proxy server environment, or not only, but that's
the likely way it got created -- and the progma just
basically says, "Don't cash me, don't cash this page."
But frequently, from what I've understood about
cash and as I've gotten deeper into it from the copyright
point of view, is that progmas are frequently ignored by
transport providers. I'm not going to point any fingers or
get into that kind of discussion, but you're going to have
virtual private networks; you're going to have proprietary
services where you have to subscribe to get in, and you're
going to have to optimize performance for those paying
subscribers because they want quality of service.
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// MR HARTER (Continued): And if you need to use
hierarchal cashing, local cashing, I think there is going to
come a day on the copyright infringement side of this and
not on the performance bandwidth access side here in this
form, where we are going to see all the content in there
that may be yanked off, and then it will have to be licensed
in advance.
In the cable TV model, for example, everything you
see coming through a set top box is prelicensed. They don't
really care how many viewers are actually out there. They
don't care how many copies in a sense are out there in that
virtual private network.
But in terms of the public Internet, there are
tools out there like programs, and people invent tools to
stop things from happening that they don't like happening.
People on the net tend to do these kinds of things for the
hell of it.
So it's a very important question you've asked.
What the resolution is, I don't thing the resolution will
lie here. It will happen in Congress this year on the
copyright and in the international arena when we go back to
address that right of reproduction.
Glee?
MS. CADY: Well, I think that while the points you
made were really interesting, Peter, I think the question
was coming from the opposite point of view, which was my
personal page, which is on a very small server on the other
end of a 14/4 modem, quite frankly, is less likely to be
accessed as quickly as the Netscape pages, not only because
of the class of server that it is on, or the type of
connection that it is, but because it's accessed so
infrequently that it is unlikely to be in anyone's cash.
And so, therefore, my page is at a disadvantage,
vis-a-vis, your page; and, is that fair? Well, possibly
not, but it is certainly life, isn't it?
(Laughter.)
MR. PEPPER: Glee, actually, I would like to go
back to something you were talking about earlier, and that
was pricing structures. Now, Netcom is changing its pricing
structure. And I guess one of the questions --
MS. CADY: I was afraid you were going to ask me
about that.
MR. PEPPER: One of the questions is, what is the
future of flat rate pricing by ISPs? And if, in fact, flat
rate pricing, as it has been described by some people as a
way, within a competitive environment, to get market share
and get started and get up and running, but then it may not
be sustainable in the long run; what about institutions like
schools and libraries that have budget constraints and fixed
budgets? So there is really two parts to the question.
MS. CADY: Well, I think there are probably about
47 parts to that question. The first thing that I want to
say is that if I were an adequate prognosticator, I would
have had lots of Netscape stock, and I probably wouldn't
have been here today. I would have been being wealthy in
the Bahamas, right?
So Netcom has definitely announced that it is
moving away from the flat rate unlimited fee for
subscribers. The way we are choosing to describe that today
is that we will be developing new services which we hope
will be of value to our customers. We're particularly
interested in the small business/home office kind of market.
And we hope to be able to develop a portfolio of services
that are desirable for that market.
That doesn't mean we are walking on our current
customers, of course, and they'll be grandfathered in. I
don't actually know what the services will be, nor have the
new prices been announced. I don't think that Netcom's move
was -- let's see, do I want to say it wasn't shocking, but
it was astonishing at that time or something, you know.
Don't be surprised or be shocked that it was there.
We're in a very competitive, heavy infrastructure
based environment. And we are having to invest more and
more in infrastructure all the time in order to provide what
a number of our users say is totally inadequate service.
Just ask them.
And I must say that while that was sort of a smart
ass remark, we tried very, very hard to provide very good
service, and we can't always. And that means that we need
to invest yet more in infrastructure, and that money needs
to come from somewhere.
So we need to develop a better match of what we
can offer to what the customer is willing to pay. And we
are hoping to hit that soon. Our announcements are expected
sometime in mid-February, you know, and then we'll see. I
don't think that it's an unusual move. We were just the
first one to make it in this industry.
MR. PEPPER: So you see this as a beginning of a
trend?
MS. CADY: Yes, I think so. Now, to answer the
next part of the question, what does that mean for schools
and libraries, it may not mean anything at all. Because
what we were talking about there was the dial access in
what's essentially the individual market. That's not the
same as direct, continuous connections. It's not the same
as necessarily dial ISCN services.
In other words, there is a full panoply of
services that can be offered. And we offer direct
connections into schools and libraries now at a considerably
discounted rate off what we would charge a corporation. And
I would expect similar kinds of things to go forward, with
that in mind.
We are interested in the school and library
market, because that's where you grow interest and new
users. And this is a model well developed by Apple Computer
Corporation, and we have all learned from it.
MR. PEPPER: Do you see a lot of model camping
now? The way you described it earlier, now with -- I know a
number of the ISPs time people out, with some of the
broadcast services, or you can have your computer sort of,
every once in a while, ask for something. So then at home,
you can get --
MS. CADY: Right.
MR. PEPPER: -- essentially the same connection I
get at the office on a LAN, where it's always on.
MS. CADY: We suspect that it is there. In our
Canadian subsidiary, we run something called a fair use
program, which will time you out after so long. And I did
actually ask what the length was, but I didn't catch the
right person in Canada to know what the length is. And we
do anticipate putting that in, in the United States, so that
we don't have people taking modem space, when they aren't
actually using the service.
MR. WHITE: Could I ask a question?
MR. PEPPER: Sure.
MR. WHITE: Is what's pushing you to shift pricing
-- is it specifically the modem camping problem; in other
words, sort of the other end of the problem that some of the
ABOCs talk about; or is it a broader question of the usage
of your network, once you get to the other side of the
modem?
I'm interested, I guess, because I think --
especially when thinking about schools and libraries and
small institutions, some of them certainly will have to live
in the dial-up world, at least for the foreseeable future.
But I know that many libraries in many schools that have
access have some sort of dedicated access facility, even if
it's just, you know, a switch 56 kind of connection.
And I wonder whether you have the same sort of
pricing considerations in those sort of low capacity but
dedicated access facilities as the dial-up.
MS. CADY: Well, I think I think low capacity but
dedicated access, in other words modem to modem, is most
Internet service providers' least favorite mode of service,
all right. It's exactly as expensive to provide that as it
is to provide it for the one to twenty or one to fifteen or
whatever your modem ratio is; which I must say, I don't know
for Netcom. So I can't answer that question.
So we price it to make people not want to buy it,
unless it's the only thing that will meet their need.
Because, quite frankly, it's a pain to provide it. And so
we are less likely to want to do that.
Now there is a difference coming up. I don't know
if you all know about the net little boom box routers that
people like -- have you heard of Whistle? Whistle is a neat
little product. I will now do a commercial for Whistle.
(Laughter.)
MS. CADY: They are making a little router that is
intended to run on a 28/8 modem that comes configured with
everything that you want. And you drop it in and you can
plug five PCs into the back of it and, presto-chango, you've
got a network. And it costs -- it retails for around
$2,000.
And a number of us ISPs are really interested in
this, because this is going to help us migrate technology
out to what we think of is the most under-served market,
actually, which is the three to five person office. It's
really not the home. People at the home who want our
service can get it. But that three to five person office
who really can't afford a system administrator, who really
can't afford somebody who knows a whole lot about network
configuration. And so this is really -- it's a great little
product.
Do you know that Mike has been standing back there
for a long time, wanting to ask a question?
MR. MAXWELL: I know that. I also know that John
Curran is fingering his bag, which I assume means that he
wants to go. So why don't I call on John, and then Mike
next.
MR. CURRAN: I have a quick question for Peter
Harter. In your tenants of universality, you advocate a
separation from Internet access and Internet service. And
I'm sure there are good reasons for that. I don't really
understand them. On the surface, it would be like me
advocating that web browsers shouldn't have E-mail clients
built into them. And so I'm sort of wondering what
separation is desirable, what basis?
MR. HARTER: Well, in the new release, which is
invaded on our home page, you can be downloaded for a free
trial basis -- a little commercial.
MR. CURRAN: This is commercial-free public
broadcasting.
MR. HARTER: We've broken the navigator in the new
product called Communicator E-mail, and separated it out
from the browser. So consistent with that thinking,
roughly, to better explain the need for considering the
desegregation, whether desegregation is actually in the
public interest, ultimately, I don't know.
But so far from what we've seen in the overall
discussion of initial service, and from my experiences in
the grassroots area prior to being at Netscape, I saw a lot
of money thrown at situations. Give us a connection for our
school, and then whiz-bang-LAN, no one uses it. So you if
you throw money at something, it doesn't mean you are going
to get the goal met. And the goal is to get advanced
communication schools to schools, libraries and rural
hospitals.
I think tapping into the mind share out there and
using a little creativity and that grassroots practicality,
giving them a huge Cadillac access service with the pipe,
the internal wiring, the content and whatever else you want
to throw in there -- the kitchen sink -- could be a mistake,
and a tremendous waste of money. And if you went to
technologies, it will be outstripped by someone else's next
release.
MR. CURRAN: Thank you.
MR. PEPPER: Mike?
MR. TREST: Mike Trest, ATM Net. I would like to
focus on the basic statement of broadening the coverage,
particularly to remote areas. I've been quite active in the
Asian Pacific Region, where you haven't discovered what
remoteness means. It makes Cheyenne or anything else look
like a very positive and high population area.
Inasmuch as I do believe that economic forces or
the little suppliers or the seven who are fighting over the
cow and the fence post will come in and fill up the gaps.
It is not so in other worlds as one of our speakers have
identified.
And in discussions that I've had with the
incumbent equivalents in the Asian Pacific Region, they are
stating as public policy that economic development for their
region, their participation in the information technology
revolution as a people is so critical and so vital that they
as governments and regulators are saying, we do not see the
commercial market springing up on its own the way it has
here in the West.
So I suggest that in the remote area concern,
there may indeed be some encouragement from the regulators
here in the states to match the encouragement by regulators
around the world to say that it is in our country's interest
to take an active role to encourage it.
Now, I don't want to go all the way back to the
good old days when everything was subsidized and part of the
defense or other department of our government to make it
broadened access to these remote areas. But I think still
some form of grant specific or other encouragements that
state and federal regulators can encourage may be
appropriate to broaden that coverage and get that
universality.
Because we all have been touched to our being
souls about the advances, the growth in understanding, the
political advancements and the democratic process that has
been advanced by those of us who become Internet users. So
I encourage, yes, we can expect the commercial organizations
to do so much. But in this area, to extremely remote areas,
I still think there is a role.
MR. PEPPER: Peter?
MR. HARTER: If I could comment on that, just the
other day I was speaking to a colleague of mine, Skip
Brandt, who used to be the Director of the ASPIN program at
the University of Arizona in Tempe. ASPIN stands for
Arizona State Public Information Network.
And over the past three or four years, through a
variety of state, corporate, and NSF grants, they put over
500 notes throughout the state of Arizona. The first phase,
their product was to get to schools, K through 12 schools,
public and private, then community colleges, then all the
universities. And included in that program were all the
Indian reservations, rural areas, urban areas, and that was
local ingenuity, spearheaded by a university program, some
federal funding, some corporate funding. It included
training, user training. It included the community
programs, the libraries.
So I think what the gentleman in the back of the
room just said is definitely true. We've seen it work
before. But those grant programs can be with problems at
times. But I think there are many good examples of grant
programs, such as ASPIN, that work out pretty well. We're
getting a lot of nodes out there where the marketplace may
not necessarily justify the capital expenditure by a for-
profit enterprise by investing in that kind of physical
plant.
MR. WERBACH: Can we go into that a little bit
more? Mike made this point, too, that if we agree that we
want to support universal access or access to under-served
areas, we have a motto, which universal service in the
telephone contacts, which on one level has been a great
success, that we have 94 percent or something of people in
households that have telephone service, but we also have had
this very cumbersome, inefficient subsidy mechanism that has
restrained competition.
How do we target actions that governments take in
such a way that they can achieve the benefit while still
preserving the kinds of diversity and local control that all
of you have talked about?
MR. HARTER: The one difference about a grant
program versus the subsidiary regime is that grants are like
a one year, or a three year, or a five year thing. You get
the money you want, you spend it, there's a budget. And
then the system either has to live on its own, or it was a
temporary project, to prove a particular point or gather
some data.
So after the contributions to the grant program
end, someone else has to pick up the tab. So it's a bit
different. And that's just to get the infrastructure out
there, the grant money. What pays for the maintenance, the
upkeep, the insurance, replacing dead modems that Glee ran
through as a business person, the realities of a network,
you have to keep feeding it, and expanding it and growing
it. And that burden may be shifted to the users. And if
there is still a need for continued federal funding, that's
a separate issue, I think. There are two different funding
phases here, if you will.
One of the things that we worked with when I was
at the NSF net was the NSF's connections program. And I
would commend it to you. It's particular intent at that
point was for connecting -- well, at the time I worked with
it, it was the second and third tier of higher education in
the country, meaning most of the Carnegie class ones were
connected then.
And so we were after the smaller institutions.
And that was very, very successful in getting people started
and having enough impetus to go forward, knowing that there
was a drop dead date, and that they had to have a plan from
that point forward in order to fund the mechanism, which
meant that people wouldn't apply for things without a good
reason. People wouldn't get a connection, just to have one.
They would need to have a reason for wanting it, which is a
point that we need to come back to.
I mean, I'm not kind of the feeling that if you
build it, they will come, all right. That made a great
movie, but it's not necessarily -- there needs to be a
balance between trying to figure out, once again, where the
need is going to be and can we meet it at the right time.
And so having the people who really want it and
can articulate their need articulated to some organization
that is well qualified to figure out, you know, should they
have some seen money to start with, I think is a good way to
do things.
MR. PEPPER: In the back?
BROCK MEEKS: Brock Meeks with MSNBC. We keep
hearing the term, "Yes, we need affordable access." But can
any of you put a dollar figure on what the hell affordable
access is. It doesn't mean squat to say affordable access
if you really mean that affordable access is $59 a month or
$6 an hour, and does affordable access mean we have
different tiers of affordable access, like Netcom wants to
do. That's the first question.
The second question, Peter, if you were going
separate access from services, then don't you run the risk
of turning those with just affordable access into high tech
ghettos. They are cut out of the services. They've
basically got TCPIP, and that's it, and they are left
behind.
MR. HARTER: I guess I'll jump in first. If you
do separate access from services and desegregate, I don't
know if it will be a high tech ghetto, that certain kind of
hyperbole certainly eliminates the problem, if you do
separate it too far.
But if you just have TCPIP, as opposed to going
through a modem and getting a busy signal, as many people
have a problem, today, you can surf all the beautiful pages
that are out there on the web in the public Internet. If
you carve out services in some way, my intention in pointing
out that desegregation as you separate out the content that
is bundled, typically, with a wire as part of a proprietary
subscriber basis.
So if not giving away some on-line services
proprietary content for free in some kind of affordable
access bundle, paid for by the U.S. taxpayer, some people
may question, do I want that kind of content in my
neighborhood anyway? Is that all Mars candy, and not just
good bread and meat and potatoes. And again I'm going to
hyperbole, too.
Again, I'll stress, it's something to consider in
the process, what ultimately is in the public interest,
after we go through a discourse, we'll hopefully figure out
what is in the public interest.
MR. WHITE: Brock, I would settle for reasonably
priced service.
(Laughter.)
MR. WHITE: No, I'm serious. Reasonably prices
means that it has some relation to the cost, and it is
provided in a competitive environment.
AUDIENCE PARTICIPANT: That means nothing.
MR. WHITE: No, it means quite a bit. I think
that a lot of people who have looked at what it costs to
provide ISDN service, what it costs to provide some of the
other technologies that are being discussed here, look at
the underlying technologies and know that they can be
provided in an affordable and reasonable way to users.
Affordable, obviously, to one person, is different
than affordable to another person. There are some things I
don't consider affordable for myself, because I don't think
they are worth anything. And I expect everyone is going to
make that judgement.
But I think that the technology -- and this is not
a principle; this is just a sort of empirical observation --
these access technologies that we are talking about have
been designed by smart engineers to be fundamentally
available to people who want to use them.
And earlier today, there was a benchmark given of
sort of somewhere between what phone service cost and what
cable service cost. There is a band in there of what people
are willing to pay.
I don't think that we need to stand on that
principle. I think the principle we need to stand on is
that we need reasonably priced service, going back to a sort
of old, you know, in some places, unpopular notion of just
and reasonable prices, which are based on cost.
But also prices that are developed in a
competitive environment, where I have some confidence that
if Glee tries to charge me $50 a month for the same service
that I can get for $20 a month somewhere else, that she is
not going to be around very long. And I think that's where
we need to get with this.
This is not a statement that says in all cases,
the market solves all problems. But I actually think in
this case the technology was developed with enough smarts in
mind that it can be affordable for people if it is priced
reasonably.
MR. HARTER: Brock, here's a tricky question for
you. Say I'm a university student and I get 7 by 24 access
to the Internet on my university account, and it's a real
good question. I've got a real powerful work station or
terminal in my dorm room. And I said, "Hell, well, I don't
want to dial into AOL. I'll just go to their optional
plan." I think you just access their content through a
TCPIP connection for $995 or whatever it is.
And there is some Internet provider saying, "You
can access the Internet through us, through dial-up for $8 a
month." And then you pay the $10 AOL and you get in cheaper
than the $19.95, which they are currently offering.
Well, say, I get in and it's a public institution.
It's a state university. And it's state tax dollars paying
for my lower tuition rate and my interconnection there. Am
I somehow abusing that by getting that advantage, by not
having to pay the underlying cost of the transport, the
connection, getting to this proprietary subscriber base
environment? These are questions people ask sometimes about
how you use a free resource, like a university account for a
for-profit activity.
I don't know, is AOL benefitting because many
young users who want to come into the chat rooms or sports
areas of their service come into university because the
connectivity is frankly a lot better, and that relieves the
burden on AOL to capitalize a bigger infrastructure to meet
the demand for its services?
MS. CADY: But causes congestion.
MR. MAXWELL: Questions? That's all we can get.
First here, then over here.
MR. GOWDA: Hi, I'm Ihor Gowda with Newbridge
Networks, and it's a question for either the panel or the
commission. It's philosophically related to Mike Trest's
question, I suppose, but it is more about broad band access
than broad access, and particularly for schools.
An application that is very useful in schools that
requires more broad band access than Internet access is
interactive distance learning, which generally requires,
say, up to a T-3s worth of access to do it properly. Are
there any policy initiatives of mechanisms that have been
thought about for -- and Brock Meeks will sympathize with
this -- for making T-3 access "affordable" to schools in
order to enable interactive distance learning.
MR. MAXWELL: Just as a factual comment, in the
universal service proceeding, one of the questions was, what
services would be available under the provisions under the
Telecom Act for schools and libraries? The Joint Board
recommended that it be all commercially available services,
that there would be discounts applied to those.
But there have been comments and reply comments
filed on that. The Commission has to make a decision on
that question by May 8th. But there was nothing in the
recommended decision by Joint Board or in the notice that
went out that said, "Well, it has to be this level of
bandwidth or that level of bandwidth." It was, in fact, all
commercially available services, subject to discounts.
Let me sort of turn over here.
MR. DOYAN: Hi, my name is Russell Doyan. I
manage the network layer for Saylor. Saylor is the State of
Maryland Library and Department of Education network
project. We tie schools, library, and government agency
networks together. We also provide the public access to
modem pools in all calling areas of the state.
FCC Chairman Reed Hundt visited us a couple months
ago. And I believe Mr. Hundt to be a champion of schools
and libraries. I think we need more champions to step
forward. Libraries have always been providers of
information. Librarians are the greatest indexers and
distributors of information. Teachers have always been
providers of information, and they shepherd our future.
Schools and libraries need legislative help in
building their networks. When BIN is installed in public
right-of-ways, it would be helpful if perhaps 30 percent of
the capacity is allocated to schools and libraries. They
need access to raw capacities, not just bundled services,
VISPs. This resource sharing that the FCC has started is a
seed that I believe will show fruit in the decades to come
for our children and ourselves.
I would also encourage the FCC to allocate some
usable frequency band with the schools and libraries, with a
permanent frequency allocation, and allow them first crack
at unused or government frequencies that are being migrated
to the public sector, or to the private sector, before they
go up on the auction block. This would allow -- this would
follow a precedent that has already been set by schools and
libraries being able to preview government surplus property
at auctions, and pick that up before it's sold. Thank you.
MR. MAXWELL: This is a fact maybe to leave the
panel with. The telephone companies that are eligible for
raw utility service grants represent probably about half the
land mass that is considered rural. And that's about 80
percent of American territory.
About 66 percent of RUS eligible telephone
companies are also Internet service providers. And there is
an interesting requirement that by law was imposed on RUS
grantees to increase the infrastructure capability of the
RUS grantees to provide better infrastructure to rural
areas.
It would be interesting to see what the role of
these companies will be in the future in reaching schools
and libraries in previously under-served areas. And it's
conceivable, I would guess, that the same kind of mandate
might be applied to Internet service provision, as was
applied to infrastructure development. That obviously
raises different questions about the relationship between
the local exchange companies and Internet service providers.
But there is, again, for purposes of reaching out,
perhaps another mechanism that will supplement the actions
that Peter was describing, which getting by with your help
from your friends, to make these services available to
people.
I would like to thank everyone on the panel for
coming. I thank you all for a long day's attendance and for
good questions, and in the future, for helping us try to
work through these issues.
MR. PEPPER: Just one last thing I want to say is,
again, from our reporter, anybody who has spoken, please
provide your business card so that we can put that in the
record.
I also want to thank everybody on all of the
panels and our audience who has been here all day. We have
found this very, very productive. This is the beginning of
a process, not the end of a process. We hope that people
participate in the various proceedings here.
There have been some very important questions
raised about incentives, innovation, investment, bandwidth,
access and democracy. And so we see this as part of an
interactive process in the tradition of the Internet.
//
So thank you all very, very much for
participating.
(Whereupon, at 3:40 p.m., the meeting was
concluded.)
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// REPORTER'S CERTIFICATE
FCC DOCKET NO.: N/A
CASE TITLE: FCC BANDWIDTH fORUM
HEARING DATE: January 23, 1997
LOCATION: Washington, D.C.
I hereby certify that the proceedings and evidence
are contained fully and accurately on the tapes and notes
reported by me at the hearing in the above case before the
Federal Communications Commission.
Date: _01/23/97_ _____________________________
Official Reporter
Heritage Reporting Corporation
1220 "L" Street, N.W.
Washington, D.C. 20005
Shari R. Bowman
TRANSCRIBER'S CERTIFICATE
I hereby certify that the proceedings and evidence
were fully and accurately transcribed from the tapes and
notes provided by the above named reporter in the above case
before the Federal Communications Commission.
Date: _01/24/97_ ______________________________
Official Transcriber
Heritage Reporting Corporation
Pamela Stevens
PROOFREADER'S CERTIFICATE
I hereby certify that the transcript of the
proceedings and evidence in the above referenced case that
was held before the Federal Communications Commission was
proofread on the date specified below.
Date: _01/24/97_ ______________________________
Official Proofreader
Heritage Reporting Corporation
Don R. Jennnings